Only greater personal accountability at all levels will rebuild trust in banking
Like other football supporters up and down the land, I was really pleased that Prince William, in his role as president of the FA, spoke out at the weekend about Fifa. The issues he raised – particularly around personal accountability – are central not only to those who lead our great sporting institutions, but they also reverberate through our business lives as well.
Here in the City, we are still living through the consequences of the leadership failures and the absence of personal responsibility that were such a striking feature of the financial crisis of 2008.
Much is being done, by firms in the financial services industry and through tough action by regulators, to ram home the importance of personal responsibility and accountability.
But in the end, regulation can only take you so far. It is up to everyone who works in the industry to take up the challenges of individual responsibility and personal accountability for what happens on our own watch.
At different stages in my working life, I have done jobs that made me a champion for consumers. And I can well understand public anger at the scale of the wrongdoing that has been unearthed.
I also appreciate the deep unease that people feel when they are having to place their trust – as all of us do, because, after all, we all need banks – in institutions about which they read such bad news.
But there are strong signs that those who now lead the banking industry recognise the urgent need for change and are putting in place the essential frameworks to help build momentum.
The Banking Standards Board (BSB) is an integral part of this process of recovery and renewal.
Yes, we are funded by the industry itself – but we are a mixed group of industry workers and people from other walks of life, who are determined to try to make things better.
We aim, through our work at the BSB, to be a catalyst for change: and we are convinced that personal responsibility and accountability are fundamental. This has to start at the top: with the people who lead banks and other financial institutions.
The primary role of setting standards of conduct, acting swiftly to prevent dishonesty and recklessness, and sending the right signals by what it does about pay and promotion, has to be the job of an effective board, providing strong oversight and timely restraint.
Bank boards have to provide essential challenge and management scrutiny, and independent non-executive directors have to satisfy themselves that there really are robust and effective risk management systems in place to protect the interests of customers, the interests of staff and the organisation’s reputation.
All of which requires a very strong personal commitment of time, effort and expertise, and a willingness to accept responsibility for what happens.
There has been much debate around the new Senior Management and Certified Persons Regimes being brought in by the regulators. The requirements are tough. Successful implementation, coupled with strong personal commitment from people in leadership positions, could provide a much-needed boost to public confidence in the industry.
But the changes we hope to help bring about through the work of the BSB don’t stop at the top. For it is only when bank and building society employees at every level are committed to personal responsibility and accountability, for every aspect of performance, that sustained improvements will be achieved and proper professional standards, right across the board, will be seen to have returned to the financial services industry.
I have said “right across the board”: and this is important. Although much of the recent coverage of regulatory actions has related to the parts of the industry that deal with fixed income, credit and currencies, no part of the industry has emerged spotless from the years of crisis.
The work of the BSB will continue to be largely focused at this early stage of its life on promoting and supporting improvements in UK banking, through a mix of evidence-based assessments, research and surveys.
And we will also work to support regulatory moves designed to tackle global market abuse and improve the international reputation of the British banking system, which we hope to hear more about next week at the Mansion House speeches.
This is the moment for change: let’s seize it.