When will UK banking secrecy really end?

Amidst allegations that HSBC's Swiss private bank may have helped wealthy clients evade tax, Professor Wilson Ng from Roehampton’s School of Business tells us about some of the key questions that need to be addressed.

Posted: 19 February 2015

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Professor Wilson Ng said: “UK media coverage of the HSBC scandal has so far failed to ask any questions about the nature of governance in HSBC and the UK retail banking industry. Despite HSBC's protestations in its open letter that it has long changed its banking practices, the public still do not know what HSBC has actually changed since the financial crisis. To whom are these changes visible? How much are HSBC’s “changes” what the public wants? For example, are HSBC prepared to shut Swiss accounts of all non-Swiss citizens?

“A wider question is which other UK banks might be involved in similar client ‘protection’ and how they have addressed this problem. The little that we know about banking practices is that High Street banks typically share an industry-wide culture of practices, which partly explains why there is little competition among those banks and why they continue to fail to meet public needs. This indistinction in the practices of our High Street banks includes their penchant for secrecy, which has been shown in the financial crisis to be an industry-wide practice.

“In summary, this latest scandal has i) again exposed public ignorance of banking practices in the UK retail banking industry as a whole and ii) barely scratched the surface of knowledge about the nature and operations of the world’s second largest bank that ‘thinks globally while acting locally’ to protect its own clients. One of the most troubling questions for public stakeholders is that there seems to be a clear divide between HSBC's concern in looking after its clients' interests- to the point of breaking the law- and the public interest that tacitly supports HSBC's operations in and beyond the UK. This divide is also evident in other highly protective and secretive UK banks and is a problem with enormous implications for public welfare. To address this institutional problem requires external, public pressure for real change beyond a mere demand by EU finance ministers for better disclosure.”

Wilson Ng is Professor in Innovation and Entrepreneurship at the School of Business. Prior to his academic career Wilson worked for over 20 years as a senior manager in investment banking and corporate finance in multiple markets. He currently teaches on Roehampton’s MBA, International Business and Business Management programmes.

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