As Andrew  BIS central bankers’ speeches  1  noted, given the scale of the regulatory effort, that means that the business models pre-crisis are not necessarily going to be very effective now. Let me turn back to trust. Why is trust still so low? My sense from the discussions is that trust remains low for two reasons. First, because of misconduct, and secondly, because of a perceived – and, potentially, actual – lack of adequate client focus. The frequent references to misconduct reinforced in my mind the importance of individual accountability, the focus of the Fair and Effective Markets Review, chaired by Minouche Shafik. It also emphasised the importance of the senior managers’ regime coming into effect in the first quarter of next year, and the importance of applying it to true codes and standards in wholesale markets, in a manner that market practitioners understand. The people at coal-face – junior traders, investors and asset managers – must understand what a true market is and their responsibility to act in a way that is consistent with maintaining true markets. In terms of a perception of a lack of client focus, I took away two gaps that were raised. The first is a financing gap, which I felt came out during the first panel, and which some economic historians in the room compared to the ‘Macmillan gap’ – the distance between finance and industry being too great. People talk today about an excess of savings not finding a home.
As Elizabeth Corley highlighted, there is a disconnect between how we in finance – and I include the public sector here – see the sector and how the general public sees the sector. Interestingly, that disconnect is much less prompted by questions over the health of our banks. Alex Brummer made this same point in terms of a sense of optimism around institutions. That is a good thing because a tremendous amount has been done over the past seven years in order to make banks much stronger. I will not go into all the details, but banks are indeed now beginning to adjust their business models. I’ll add a very clear message on behalf of those of us on the regulatory side to the bankers in the room and those watching from outside: there is no Basel IV. There is no other big wave of capital regulation coming. With the agreement on Total Loss Absorbency Capacity, the last pieces of the puzzle have been put in place. It is true that we do have to make some adjustments to risk weights; and there will always be things to iron out, but I repeat there is no big other prudential regulatory wave for the banking sector. As Andrew Bailey made clear in one of the break-out sessions I attended, the focus now is about greater certainty and adjusting business models to these new realities.