The Impacts of the Libor Scandal on Consumer Sentiment and Banking Choice in the UK
- ID: 2328904
- July 2012
- Region: United Kingdom, Great Britain
- Retail Finance Intelligence (RFI)
On June 27th 2012 Barclays bank was fined £290m by UK and US regulators for attempting to manipulate Libor rates, a scandal which eventually resulted in the resignation of Barclays Chief Executive – Bob Diamond. The FSA found that Barclays’ traders made routine attempts to lobby colleagues responsible for submitting the banks estimate of its borrowing costs to the BBA. It is widely suspected that the activity was not restricted to Barclays. With expectations high that similar sanctions will be handed out in the coming months, this report takes a timely view at the impact that the scandal has had to date on UK consumer sentiment and provider choice. This report examines the fall out that the scandal has had both for Barclays and the banking industry as a whole and provides insight as to the likely consequences for those banks who may be implicated in the scandal in the coming months.
This latest scandal has added to the downbeat sentiment held towards the UK banking industry as a whole. As such the industry in general, particularly the larger institutions and high street banks, are felt to be collectively culpable. Research has revealed that approximately 5% of UK mortgage holders will change a banking relationship as a result of the Libor scandal. One in five mortgage holders claim to be considering a future change. Factors such as the unknown full extent of the scandal and distrust in the alternatives are so far preventing these consumers from taking action. It may be too soon to predict with any degree of accuracy the impact that the Libor scandal will have on Barclays and the banking sector as a whole but there is certainly enough evidence to suggest a degree of influence. How providers who are implicated handle themselves in the coming months will be critical to their ability to limit the fallout. The majority of respondents cited their rationale for change as a requirement for a smaller, more trustworthy, customer focused or ethical bank.
Features and Benefits
- Examines the impact of the Libor scandal on consumer sentiment
- Evaluates how the Libor scandal is likely to affect Barclay’s ability to retain or extend existing banking relationships
- Examines the importance of price compared to strong ethical values for consumers when selecting a financial institution
Key Questions Answered
- How has the Libor scandal affected consumers’ banking decisions?
- What has been the impact of the Libor scandal on future provider choice?
- Which providers will benefit from the scandal? SHOW LESS READ MORE >