It is one of the world's most important financial centres, raising huge sums for corporate and government borrowers, and managing investments for millions of people, but the City is tainted by scandal. Could its reputation have been better protected?

In his new book The City, Richard Roberts, director of the Centre for Contemporary British History, a research institute at the University of London, chronicles the most significant debacles of recent times. He says: "Scandals such as that of Barings and, more recently, Société Générale [which occured in Paris] have resulted from the activities of pretty extreme individuals. The fact that they achieved what they did indicates that so-called tightened procedures and systems that would be derived from the previous breach failed to prevent these people perpetrating their crimes.

"But no matter how sophisticated the security measures banks and other financial institutions put in place, there will always be someone looking for an opportunity to beat the system," says Roberts.

On the issue of financial calamities, he says that headline crises, such as that at Northern Rock, illustrate the level of risk that banks will go to to achieve maximum profits and the enormous damage done to the public image and reputation of other organisations in the sector when such high-risk strategies fail.

Says Roberts: "Historically, the City has always faced crises, with the exception of the relatively quiet post-Depression and post-World War II years. Unless we return to those days of tighter lending controls and restricted market activity, you won't eliminate them."

Nevertheless, the pressure on City firms to preserve their reputation, integrity, trust and ethical values, has never been greater, and the stakes have never been higher.

"Financial organisations have to become much more aware of the public's perception of them, which can be quite different from what they might expect," says Roberts. "Take Nick Leeson and Jerome Kerviel, who dealt catastrophic blows to Barings and Société Générale respectively, in neither case did their motivation appear to be personal gain.

"Surprisingly, what transpired from these events was a sense of public admiration for these individuals, who were possibly viewed as modern day Davids battling the greedy corporate Goliaths and inflicting real damage."

This only highlights the difficulties facing City firms and institutions trying to restore confidence. The general public is clearly better informed and more financially literate than it has ever been—and its perceptions of the Square Mile remain negative.

Reversing this poor image is important, for the whole financial services industry. Scandals in the City tend, as we've seen, to reverberate across the sector. So, as the country braces itself for an economic slump, can the City get its act together, or will history simply repeat itself?

Roberts adds: "Whether it is down to bigger profits, or a desire to beat the system, there will always be the potential for a crisis. The current economic slowdown will force financial institutions to pull in their horns, but when things bounce back, there is no doubt that the lessons learned will be forgotten."