This week, HSBC was exposed for its role in aiding industrial-scale tax evasion by the wealthy at the expense of the Treasury's coffers.
A leaked list of 100,000 HSBC clients at its private Swiss bank has finally come to light after it was handed over to the French government in 2009 by one of HSBC’s systems engineers.
The list includes the names of more than 1,000 people HMRC believes have evaded tax in the UK.
At a time when governments are still imposing austerity measures on the public and drastically reducing state services in the wake of the 2008 financial crisis, evidence of a wealthy elite hiding its money from the Government – aided and abetted by a bank – only compounds public sentiment that, far from being "all in it together", ordinary people have taken the strain of the crisis while the institutions that helped bring it about assist the rich to avoid paying their fair share.
String of scandals
Public trust in banks is at a low ebb: The latest 'Trust Barometer' survey, from Edelman, shows that just 36 per cent of the UK public trusts them and it is not hard to understand why.
Since 2008, there have been at least five major scandals involving one or more banks.
These include the Libor rate-rigging furore, involving Barclays, RBS and UBS, which led to the banks being fined £14bn and Barclays’ chief executive, Bob Diamond, being forced to resign.
Then there was miss-selling of Payment Protection Insurance policies, in which millions of customers were pressured into buying unnecessary, and often worthless, policies to pay off loans or mortgages in the event of sickness or losing their job.
Banks including Lloyds, Barclays and RBS are thought to have paid out £22bn in compensation and the financial ombudsman has dealt with 1.25 million complaints.
Continuing in the same vein, Lloyds, Barclays, RBS and HSBC were forced to compensate thousands of small business for miss-selling complex interest rate hedging products, which the Financial Services Authority said did not comply with regulations in 90 per cent of the cases it examined.
Add to that the conspiracy to manipulate foreign exchange rates, once again involving HSBC, RBS and UBS, and a money laundering scandal involving Standard Chartered and hidden transactions with Iran, and a depressing pattern emerges in which the banks lurch from one reputational crisis to the next and sink ever lower in the estimations of the public.
The directors of comms at Lloyds Banking Group and Barclays declined to be interviewed while the director of comms at Santander did not respond to a request for an interview. HSBC also declined to be interviewed.
"Their reputations are in tatters," argues Pat Southwell (above), director of strategy and head of crisis comms at Berkeley PR. "Bankers are widely disliked and distrusted. Rightly or wrongly, they represent an ethically dubious elite who are seen to act above the law at worst, or can negotiate the law at best."
Lack of contrition
The recent scandals are all underpinned by the financial crisis of 2008 in which the banks, collectively, emptied the coffers of governments around the world who rushed to save them in a bid to avert financial Armageddon.
Contrition by the banks for the events of 2008 and the ensuing scandals is thin on the ground, but what price, if any, will they pay if the public has no trust in its financial institutions?
Mark Knight (above), director of Broadgate Mainland, says: "The reputation of the UK banking sector is at rock bottom and the latest HSBC incident makes the recovery look even more challenging. There is a significant lack of trust and to restore confidence will take years of careful communications management."
However, Southwell thinks there is a big difference between ‘the banks’ and ‘my bank’ in the minds of the public and it is unlikely that people will opt to hide their money under the mattress rather than hold a current account.
He continues: "There will be a price – paid in fines and potentially criminal charges. But trusted or not, we need banks and don’t often connect the grand narrative with our day-to-day experience."
But, along with so-called challenger banks such as Metro and Atom, which are using a comms strategy based on the principle of not being tainted with historical bad behaviour, a new sector is rushing to provide financial services at the expense of traditional providers.
Andrew Appleyard (above), director of MRM, says: "Mini-bonds and crowd funding are filling the gap where banks fear to lend. Online payments systems and the new payments architecture mean that consumers can increasingly cut banks out of the equation. We are likely to see more services traditionally owned by banks being offered by niche, web-based companies, from mortgages and insurance to short-term business loans and even current accounts."
Knight agrees that the traditional banks will face an increasing struggle to hold on to the business they previously had.
He says: "Before 2008 consumers were happy to use their bank for a range of financial services such as mortgages and investment bonds but this line of business has increasingly evaporated."
Paying the price
Along with reputational damage and massive fines imposed by regulators, the banks also face huge costs as a result of their recent behaviour.
Knight says: "The cost of improved regulation alone makes eye-watering reading. HSBC is spending up to £525m annually on its compliance and risk programme and employs a tenth of its workforce, 24,300 people, on this work."
So, can the banks fall any further in the hearts and minds of the public?
Some would argue that it was ever thus, tracing a line from biblical stories about money lenders being driven from the temple through to tales of hidden Nazi gold in safety deposit boxes and that banks have always been cast as villains in popular culture.
"The problem is a very human one," says Southwell. "Rightly or wrongly, they have money and others don’t. At a time when the gap between rich and poor is colossal, news that they don’t always play by the rules certainly sets them back further."
However, it is unlikely that bankers are suffering an existential crisis about whether their life’s work has any meaning or purpose.
A more pressing question for the leaders of banks, as Martin Wheatley, chief executive of the Financial Conduct Authority recently told the Treasury Select Committee, is finding the skeletons in the cupboard before others do.
So what, if anything, can banks do to restore their reputations in the eyes of the public and do they even care?
Banks need to start presenting themselves as 'human'. That means fronting up to the damage that unethical behaviour causes at a human level
Andrew Appleyard, director of MRM
Taking ownership of some of the damage they have caused would be a start, says Appleyard.
He adds: "As consumer-facing businesses, they need to start presenting themselves as 'human'. That means fronting up to the damage that unethical behaviour causes at a human level - i.e. to people's lives."
Growing a conscience would also help, argues Knight.
He says: "A new set of industry standards and a robust social conscience will put them on the long road to restoring trust."
Need for transparency
Transparency in their dealings, sorely lacking in the latest episode, is also key to improving public perception of the banks, all agree.
The HSBC scandal is only just beginning and, three days in, the vortex is already sucking in its former chief executive, Stephen Green, who is now a life peer in the House of Lords and a former Tory minister, as well as party donors on both sides of the spectrum.
Lord Green could be heading for his very own 'Fred the shred' moment if the media, which like to put a face to a crisis, have their way.
Appleyard says: "The farce of Stephen Green's interview with Panorama this week encapsulates how out of touch many of these senior financial services executives are. They need to address the concerns of the public head on. There is little leadership. The heads of the banks, Fred the Shred, Paul Flowers etc, are known only for the embarrassment they have brought on themselves and their industry."
'Benefits scroungers' are made an example of while 'tax scroungers' are let off lightly
Margaret Hodge, chair of the Public Accounts Committee
The Public Accounts Committee has called for an investigation but it remains to be seen whether any inquiry will produce more light than heat.
However, in an interview this week, the PAC’s chairman, Margaret Hodge MP, drew an uncomfortable parallel between the treatment of tax evaders and the pursuit of benefit cheats and claimed that "benefits scroungers" were made an example of while "tax scroungers" were let off lightly.
Hodge also gave both barrels to HMRC which, despite having the relevant leaked information since 2010, has only brought one successful prosecution so far and recouped £135m in lost tax, compared with £200m recouped by Spanish tax authorities and £188m recovered by the French.
The HSBC issue is now live, political and toxic for anyone who becomes associated with it in the coming weeks.