FINES are failing to curb misconduct at banks or prompt customers to switch lenders, a top British consumer organisation has said.
Watchdog the Financial Conduct Authority (FCA) has ratcheted up fines to record levels in a bid to deter wrongdoing after banks were caught trying to rig currency markets and the Libor interest rate benchmark.
However Sue Lewis, chair of Britain's Financial Services Consumer Panel, told a CityUK conference, she is not convinced financial penalties are effective.
She said: "Do they actually change behaviour? I don't think there is much evidence of that."
"Do they work in the sense of hurting companies and to make them want to change their behaviour? I think the jury is still out and the answer is probably not."
Ms Lewis pointed out the share price of Barclays actually rose after it was fined recently for attempting to manipulate foreign exchange markets.
She added that consumers were not switching banks in large numbers after such fines because they can't differentiate between lenders on behaviour.
"People think that all banks are the same, that they are all equally bad," said Lewis, whose panel formally advises the FCA on consumer issues.
Meanwhile David Nish, chief executive of Standard Life, said the key was to change behaviour and to design better products for customers, not just focus on fines.
"You have got to have to think of a balance between the carrot and the stick," Nish told the conference.
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