REFILE-UPDATE 1-British banks' rotten culture will take generation to fix - think tank

(Corrects typo in first bullet point)

* Fines, misconduct have cost British banks $60 billion

* New banking standards body vows to name errant bankers

* New banking standards body pledges independence

By Matt Scuffham

LONDON, Nov 26 (Reuters) - A "toxic culture" that has costBritish banks 38.5 billion pounds ($60.6 billion) in fines andcompensation over the past 15 years will take a generation tofix, an independent think tank said on Tuesday.

Britain's banks have been hit by costly scandals includingthe mis-selling of loan insurance and complex interest-ratehedging products.

A report into the culture of British retail banking by thinktank New City Agenda and Cass Business School said aggressivesales practices took hold over two decades, with some branchstaff receiving cash bonuses, iPods or even tickets to theWimbledon tennis tournament for hitting sales targets.

"A toxic culture which was decades in the making will take ageneration to turn around," said Conservative lawmaker DavidDavis, chairman of New City Agenda.

Link to report - http://newcityagenda.co.uk/?p=494

The think tank recommended the new Banking Standards ReviewCouncil (BSRC), launched this year, should talk to branch staffto check they are not under pressure to sell and should reportannually to parliament's Treasury Committee, which oversees thework of the finance ministry.

Speaking at a parliamentary event to launch the report, theBSRC's new chairwoman Colette Bowe vowed to maintain theindependence of the new body, which is funded by banks, and toname and shame bank staff who misbehave.

"Independence and transparency are crucial. People are goingto be named. We will report in public what we find," she said.

Despite having the support of Britain's biggest banks, theBSRC has yet to confirm the backing of large international bankswith operations in London. Bowe told Reuters that talks withthose institutions were "positive and constructive".

The think tank's report said the mis-selling of paymentprotection insurance (PPI) alone cost banks at least 27 billionpounds in Britain's costliest consumer scandal. The high-marginproducts were meant to cover repayments if customers fell ill orwere out of work but were often sold to people who did not needthem or would be ineligible to claim.

The biggest sum set aside by a bank for PPI compensation isthe 11.3 billion pounds at Lloyds Banking Group,followed by Barclays (5 billion pounds), RBS (3.3 billion pounds) and HSBC (2.5 billionpounds).

(1 US dollar = 0.6383 British pound) (Editing by David Goodman and Mark Potter)