Simon Read: the Government must force banks to serve us, not just profit from us

Tens of millions of bank customers appear to know something that the Chancellor doesn't. It's that there urgently needs to be change before we can start trusting bankers again.

MPs were the latest this week to tell George Osborne that his attempts to reform banks are woeful. In a damning report published on Monday, the Parliamentary Commission on Banking Standards calls Mr Osborne's plan "wholly inadequate" and the Government's arguments "insubstantial".

The commission repeated its call for watchdogs to be handed reserve powers to break up the entire British banking industry. That may sound unnecessarily drastic, but let's bear in mind that banks' actions came close to bringing about the collapse of the whole economy.

Mr Osborne has been talking big about his proposed moves. He has said he will introduce powers to "electrify the ring-fence" if lenders fail to keep high street branch operations separate from the dealing floor.

"2013 is the year when we reset our banking system so the banks work for their customers and not the other way round," he said in a speech outlining the banking reform Bill last month.

The Chancellor believes that handing regulators powers to split the entire industry is unnecessary. But Andrew Tyrie, chairman of the Parliamentary Commission, said Mr Osborne must go further and introduce a "second reserve power for full, industry-wide separation" if the ring-fence is breached. In other words, a sensible protective measure.

Beyond the political squabbling is a decision that will affect all of us. Banks must be made to put their customers' needs first, rather than seeing them simply as clients to whom they can flog expensive insurance.

With that in mind, it's interesting to examine research published this week by the ethical bank Triodos. It shows that 16.5 million people feel only negative or indifferent feelings towards their bank, with many feeling angry or ashamed about it.

When asked to describe their bank, 16 per cent of banking customers used the word "greedy", while a further 6 per cent used "unethical".

When it comes to regaining trust, banks need to offer fairer charges and decent products and be totally transparent about fees and the way they profit from us all.

Perhaps the most damning statistic in the Triodos research is the fact that just 7 per cent of banking customers think their bank is transparent.

That shows just how far banks need to go to start restoring trust. And it should send a message to Mr Osborne that his banking reforms are still falling far short of being adequate.