Banks must change culture and put customer first again, says RBS chief

In a speech at the London School of Economics, Mr Hester said he believed the finance industry’s problems had arisen from banks losing sight of their role to serve customers.

Britain’s banks have been rocked by a series of scandals including interest rate rigging, breaches of anti-money laundering requirements and the mis-selling of loan insurance and complicated interest rate hedging products.

“It is possible to look at the many scandals that have hit banking in recent years and see them as individual episodes of bad judgment or wrong behaviours,” Mr Hester said.

“In fact, I think it’s more accurate to say that most of them are related to one big scandal: banks have simply not been good enough servants of their customers in the recent past.”

Mr Hester said the banking industry needed to do more than just treat the symptoms.

“We cannot afford to just fix Libor, to just fix money laundering controls, or to just fix the way we market our products. We have to address the root cause of the industry’s failings,” he said.

RBS is 82 per cent owned by the government following a £45bn bailout in the financial crisis in 2008. It is under investigation for its role in a scandal over Libor (the London Interbank Offered Rate) and faces punishment over possible breaches of sanctions against Iran. The bank has also set aside £1.3bn to compensate customers mis-sold Payment Protection Insurance (PPI).