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Gordon Brown: “I am determined to end reckless banking”

In his weekly podcast, the Prime Minister dedicated this week's to the banks.

Here's the transcript:

I’m determined to end the reckless banking practices that have left so many of you worried about your household budgets. 

So to give you a better deal we are taking extensive action to reform the whole culture of the financial sector and to protect and empower you, the consumer.

First of all, banks must put lending to businesses and homeowners before making huge payouts.

I’m pleased to say that this week more banks agreed to our reforms on bonuses so that they will now be paid over a number of years and can be clawed back if they are not deserved.

And never again should banks and credit card companies encourage you to borrow more than you can realistically afford to repay.

That’s why I asked the financial services authority to review the mortgage market to ensure there is no return to irresponsible and unaffordable lending.

I believe lenders should have to carry out proper checks on incomes before agreeing home loans.

And to protect homebuyers further, we need much tougher rules to make sure that high loan-to-value or high loan-to-income mortgages are offered only when the lender has done rigorous checks to ensure people can keep up repayments.

And borrowers who get into difficulty through no fault of their own have to be treated fairly. Repossession must always be the very last resort.

Our actions have so far helped 300,000 of you to keep your homes and the rate of repossessions is half what it was in the last recession – and well below that of the United States of America.

But as well as making sure that banks lend responsibly, we also need to make sure that you can have real confidence when you open an account.

And so from the first of November new regulations will come into force to make retail banks play fair.

We agreed a set of ‘fair principles’ with credit card providers earlier this year including a breathing space for customers struggling with their debt.

But many of you still feel that you are not getting a fair deal because of sharp practices by lenders.

So later this month we will publish our plans to make the credit card companies play fair too.

And specialist teams will target housing estates where loan sharks extort eye-watering interest payments from those least able to afford it.

Be assured, all our efforts are driven by my determination to ensure a fair deal for all; with financial services that work for you, not for them.

If you want to listen to it, click here.


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About Chris M Skinner

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here…

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