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Bankers and financiers whose misconduct contributed to the credit crunch should be prosecuted, David Cameron said today.
In a hard-hitting speech, the Conservative leader complained that misconduct in the City was often punished by regulatory sanctions when criminal sanctions would be more appropriate.
And he accused Gordon Brown of showing "a failure of moral leadership" for supposedly not urging the authorities to adopt a robust approach to financial wrongdoing.
Cameron did not identify any alleged culprits. But he contrasted the approach taken by the US authorities with the behaviour of the Financial Services Authority, which he said had only brought four cases to trial in the last 12 months.
And he said that the FSA and the Association of Chief Police Officers (Acpo) have both acknowledged that there is there is some evidence that laws were broken in the City in the run up to the credit crunch.
In his speech to the Conservative conference last year, Cameron said that there would have to be a "day of reckoning" for those responsible for the financial crisis. Today he said that, while most of the million or more people working in the financial services industry were "honest and hard-working", the "irresponsible behaviour" of some bankers and financiers contributed to the crisis.
"In the good times, some people working in the financial services industry paid themselves vast financial rewards - salaries and bonuses beyond the comprehension of most of us," Cameron said.
"Now when it's all gone wrong, they have been bailed out by the taxpayer. Nurses and cleaners and teachers and many millions of others, working in every part of our economy they will foot this multi-billion pound bill.
"Well: on behalf of the taxpayer, on behalf of the nurse on £20,000 a year, on behalf of the cleaner on the minimum wage, on behalf of working families worrying this Christmas like never before about what next year will bring I say it is fair and reasonable that those responsible are held to account for their behaviour and that we show clearly that in this country, there is not one rule for the rich and a different rule for everybody else."
Cameron said that in the US the FBI has allocated 177 agents to work on as many as 1,500 "mortgage-related" investigations. The Securities and Exchange Commission has launched more than 50 inquiries into alleged sub-prime abuses and four bank executives have already been charged with fraud.
The Tory leader said this was evidence that "in the home of capitalism a sense of fair play is in evidence". But he said the situation was not the same in the UK where he claimed "there just doesn't seem to be the will to see appropriate justice done at the highest level".
He went on: "Doctors who behave irresponsibly get struck off. Bankers who behave irresponsibly should face professional consequences. And, for sure, if anyone is found to have behaved criminally they must be prosecuted.
"Of course, this requires clear evidence of wrongdoing. But that doesn't mean we should sit on our hands and say it's all a failure of regulation. Are the government seriously saying that nothing untoward could have happened over here? How can anyone believe that in the worst financial crisis of our lifetime no proper and thorough investigation needs to happen?"
Cameron partly blamed the FSA. He said that in the last 12 months it only brought four cases to trial, and that only one of those, involving a mortgage adviser, was relevant to the credit crunch.
The FSA "still prefers fines and mediation to the full application of the law", Cameron said. That should change: "We need to make it 100% clear – those who break the law should face prosecution."
But Cameron also blamed the prime minister for not forcing the authorities to adopt a more robust approach.
"To send out the right message about our country's values to help stop this crisis from happening again and to help restore the City of London's reputation I believe it is now vital that investigations are vigorously pursued to their appropriate conclusion. And the fact that the prime minister has not been urging our authorities to pursue financial wrongdoing like in America is in my view, a failure of moral leadership," he said.
Cameron did not identify anyone he would like to see prosecuted. But he said that in March Acpo estimated that mortgage fraud was costing £700m and he said that the FSA had found evidence of "informed price movements" - suggesting possible market abuse – before nearly one-third of takeover announcements last year.
He also quoted a comment from a QC, Amanda Pinto, who said last month: "There are many cases of misconduct that the FSA has pursued as regulatory breaches where the evidence suggests that these offences are both substantial and criminal, such as fraud and misleading conduct".
Cameron also said that demanding tough penalties for financial wrongdoing was consistent with his belief that "corporate responsibility and personal responsibility" were essential components of his vision of greater social responsibility.
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