'Deep change' to banking ethos needed.

In December, authorities in the United States announced that they would fine Standard Chartered Bank $327m for disguising transactions that violated US sanctions against "rogue regimes" such as Iran, Libya, Sudan and Libya. Later the same day, HSBC announced that it would pay US authorities $1.9bn to settle claims that it had engaged in money laundering for "drug king-pins and rogue nations".

These revelations followed news about overly risky lending practices prior to 2008, mis-selling of payment protection insurance and the manipulation of the Libor rate. The upshot of all this bad news is an increasingly widespread agreement that something desperately needs to change within many of the large financial institutions. What is less clear is exactly how the banks might be held to account.

For some, addressing problems with the financial community is only a matter of better communication. According to some, we have witnessed too much so-called banker bashing. This means the good done by City of London for the United Kingdom as a whole has been ignored. Some are concerned that this bad press will result in global financial institutions becoming increasingly hesitant to do business in London. If the problem is poor public perception, the solution is an information campaign that reminds the wider public of all the good done by the City.

There is no doubt that the financial sector makes a huge contribution to the UK economy in various ways. But despite what some may think, the public is not stupid. They know the banks are one of the few globally competitive sectors in the UK economy. They also know that this sector has been riddled with irresponsible behaviour. While changing the public debates about the banking sector might make for a more balanced debate, it certainly will not address the root causes of the problem.

Another increasingly prevalent approach to addressing problems within the banking sector has been the use of increasingly severe punishments. Until recently, authorities have been somewhat hesitant about punishing banks with large fines. Often, charges for financial misadventures were little more than a slap on the wrist. Recently, though, national authorities seem to be far more willing to dole out more significant fines. And the costs of recent rulings often go far beyond the immediate fine which banks pay to state authorities. Typically banks that pay large fines are also punished by the markets with drops in share prices. The assumption seems to be that by making bad behavior increasingly costly, banks are likely to cease and desist.