The Banking Industry needs urgent reform, Sir Mervyn King, Bank of England Governor said today.

Speaking at the launch of the Bank’s twice-yearly Financial Stability Report, Sir Mervyn said the banking culture and structure suffered from  “excessive levels of compensation, shoddy treatment of customers, as well as deceitful manipulation of one of the most important interest rates.”

His comments accompanied news today that the UK’s big four banks have been found to have mis-sold complicated financial products to thousands of small businesses.

Yesterday, Barclays was fined £290m for fixing a key interest rate.

And there was also the mis-selling personal payment insurance to people who either did not need it, would not be able to claim on it, or did not know they had been sold it.

Sir Mervyn said: “We can see we need a real change in the culture of the industry.

“We don’t need any inquiry to know what we should be doing. There must be many people who work in banking today who know that they are honest, hard-working and feel they have been let down by some of their colleagues and indeed their leaders. What I hope is that everyone – everyone – now understands that something went very wrong with the UK banking industry and we need to put it right.”

He called for the government to implement the recommendations of the Vickers Commission on banking, which said that more risky investment banking should be separated from day-to-day banking needs of individuals and small businesses.”

Simon Walker, the head of the Institute of Directors, said in a statement: “As well as ripping off their customers, they have also harmed the reputation of business as a whole – they should feel deep shame for the damage they have done.”