There needs to be a structural shift in the finance industry, making it more limited in scale and more effectively directed to real economic needs, according to economist John Kay, in his latest book Other People’s Money: Masters of the Universe or Servants of the People. He will be outlining the book's arguments in an event hosted by think-tank, New City Agenda, next month.

Kay, who recently chaired the Review of UK Equity Markets and Long-Term Decision-Making which reported to the Secretary of State for Business, Innovation and Skills in July 2012, will discuss how the financial sector has grown too large, detached itself from ordinary business and everyday life, and has become an industry that mostly trades with itself, talks to itself, and judges itself by reference to standards which it has itself generated. And the outside world has itself adopted those standards, bailing out financial institutions that have failed all of us through greed and mismanagement.

The finance industry, however, does fulfill a proper role in society - by making payments, matching borrowers with lenders, managing our money and reducing the costs of risk - and the reform of the industry needs to focus on ensuring that these roles are those that are made important in the future, Kay believes.