Finance mess in UK due to 'easy rewards'

LONDON - British MPs blamed a culture of easy rewards for the "astonishing mess of the financial system" and say regulators need to consider splitting retail banking from more risky commercial banking.

The influential Treasury select committee also attacked the lending practices of banks that were given Government bailout funds, saying that small businesses were finding it hard to get loans despite reports showing lending levels are rising.

"The culture within parts of British banking has increasingly been one of risk-taking leading to the meltdown that we have witnessed," the cross-party committee of politicians said in a strongly worded 121-page report into the collapse of the banking sector.

The committee produced the report after weeks of interrogating Government ministers, including Treasury chief Alistair Darling, and bankers, including executives at the bailed out Royal Bank of Scotland PLC.

Evidence that the fallout continues came with a Government report showing that company insolvencies jumped 56 per cent in the first quarter compared with a year ago, while individual insolvencies rose 19 per cent to record levels. Insolvency specialists Begbies Traynor predicted that personal insolvencies might rise above 125,000 this year.

- AP