GUEST COMMENT: How the Labour Party plans to build a stronger future for financial services

The current debate around the bonus awards for senior banking executives belies a deeper set of policy questions which need to be addressed.

How can we learn lessons from the credit crunch and curb excessive risk-taking by bankers driven to deliver maximum profit in the knowledge that the taxpayer will prop them up if things go wrong?

What should be the role of Government and regulators from now on? And are the practices that took place before the recession necessarily intrinsic to the culture of UK financial services, or is there a more sustainable and successful path to a thriving City sector for the future?

Labour believes that we need to reform the regulation of financial services to ensure that the hit taken by the taxpayer, creating a budget deficit with serious ramifications for public services and the most vulnerable in society, will never happen again. All political parties are in general agreement on some changes, for instance, that the banks ought to have far sturdier capital reserves to act as a buffer zone should their investments go wrong.

But there are differences.

We feel that the Chancellor's dictum of "we're all in it together" must surely mean that the banks - and not just the public purse - should pay their fair share in mending the damage done. The Treasury's watered-down banking levy and cuts to corporation tax for the banks mean that the burden is falling disproportionately on families and children up and down the country, which is why we feel that a repeat of the bonus payroll tax is necessary in 2011, in the absence of any action from Ministers.

Over the coming months the Government will be bringing forward major reforms to the regulatory arrangements which will abolish the Financial Services Authority and replace it with a new set of institutions. As we scrutinise those proposals we want to ensure that they are accessible, comprehensible and workable, able to prevent excessive risk-taking that may damage communities far beyond the institutions taking those commercial decisions.

We want a prosperous financial services sector in this country - and this means showing leadership at home and in the EU to get these business activities back onto the right tracks. By defending outdated practices and failing to create an atmosphere of transparency and accountability, with strong diversity and competition across the sector, the current Government are entrenching distrust among the public and giving consumers the impression that their interests are subservient.

There are a great many honourable and responsible practitioners working in financial services, where the vast majority have and will always put the best interests of the clients first. It is for these people - and for the customers depending on an efficient suite of financial products - that Labour will seek reforms that put UK financial services on a firmer and settled pathway for the long term.

Chris Leslie is Labour MP for Nottingham East and speaks on banking for the Labour Party.