Last checked at 
* Banks decided to create standards body last September
* Chairman, CEO of new body should be non-bankers - Lambert
* Most of new body's board should be non-bankers, he says
* Body should be up and running by end of year - Lambert
By Matt Scuffham
LONDON, Feb 10 (Reuters) - A new standards body for Britishbankers should be led by people from outside the industry toestablish its independence and credibility, the man tasked withsetting it up said on Monday.
Britain's biggest banks pledged to set up the body last yearafter the industry was hit by scandals including the rigging ofbenchmark interest rates, breaches of anti-money launderingrules and the mis-selling of loan insurance and complex interestrate hedging products.
Richard Lambert, former director general of theConfederation of British Industry, said non-bankers should beappointed as chairman and chief executive of the organisationand most of its board should come from outside banking.
"The credibility of the new body will be built on theindependence of its board, and on widespread industryparticipation. Its first task will be to define standards ofgood conduct, and to help drive these into all businessactivities," he said in a consultation paper.
Politicians have attempted to placate public anger andtighten controls over an industry blamed for excessiverisk-taking in the lead-up to the 2008 financial crisis.
The reform of Britain's banks has been hotly debated since66 billion pounds ($108 billion) of taxpayers' funds was pumpedinto Royal Bank of Scotland and Lloyds to keepthem afloat, and a committee of lawmakers recommended thecreation of a professional standards body last June.
Three months later, Lambert was asked to set up thestandards body up by the chairmen of Britain's five biggestbanks - HSBC, Barclays, Lloyds, RBS andSantander - and its biggest customer-owned lender,Nationwide.
The body, which will be funded by the banks themselves, willset codes of conduct and behaviour that apply to all bankemployees and will work closely with regulators.
Lambert said the aim was to have the new body up and runningby the end of 2014, but he acknowledged the scale of the taskahead.
CHANGE CULTURE
"It will take years to change the culture of the bankingindustry, and so to demonstrate beyond doubt the impact of thenew organisation. The objective is a measurable and continuousimprovement in the conduct and culture of banks and buildingsocieties doing business in the UK," Lambert said.
Participating banks will have to publish a report each yearon whether they are meeting the new standards.
Lambert proposed that a panel of four people, from outsidethe industry but possibly including a senior central banker,should appoint a chairman and chief executive for the new body.
In an interview with Reuters, he expressed an interest intaking on the role himself but cautioned that the decision wouldnot be made by the banks.
"I would be happy to be the chairman (but) the point I makevery strongly in the report is that the chairman must not beappointed by the banks. I have been appointed by the banks and Iwould see myself as a sort of interim," he said.
Lambert proposed a board of no more than 12 people be set upto run the new body - comprising a minority of bankers andmajority of non-bankers.
He said the bankers on the board should bring knowledge ofdifferent sectors within the industry but have no conflict ofinterest, suggesting recently retired senior executives might beobvious candidates.
For the non-bankers, Lambert suggested "people withexperience as investors, members of consumer and employeegroups, small business people and the like".
Lambert said it was important that international banksoperating in London also participated in the new body and saidhe was encouraged by the initial reaction.
"Most people I've met from international banks have beenpositive and want this to work," he told Reuters.
