Today 2nd April, the BSRC announced its new board and members and issued a statement that the banking industry must win back trust and raise its game, with Mark Carney supporting the initiative.
But haven’t we been here before?
The UK has a knack for writing exceedingly good reports which analyse in detail wrong doings and provide recommendations for future conduct. One of these recent reports was titled the ‘Banking Standards Review’ by Sir Richard Lambert. This report concluded that the standards of behaviour and competence in the banking sector have to be raised collectively and that this should be done by an independent body to drive the process forward. The Banking Standards Review Council (BSRC) was born and Dame Collette Bowe was appointed Chairman of the new body in October 2014.
But let’s take a look back to 2013. The Report of the Parliamentary Commission on Banking Standards, Changing Banking for Good was published, also known as the Tyrie report. At more than seven hundred pages, this report was dedicated to assessing the problems facing the UK banking culture which essentially looked at regulatory solutions to fix ethical problems in the industry.
Also in 2013, the Barclays Executive Board appointed Anthony Salz, who was a prominent lawyer and former vice chairman of the BBC, to compile and publish a report and recommendations for the bank going forward titled the Salz Review – An Independent Review of Barclays’ Business Practices, which again like the Tyrie report, focussed on changing the culture in banks and behaviour of bankers, moving away from the traditional high risk, high reward culture assumed in investment banking.
Previous studies on banking scandals and failures provide a very accurate analysis and critically evaluate what went wrong and what banks need to do to put things right. However, some would argue this has had little effect on behaviour and culture in banks that is attributed to their misdemeanours.
Going back to 2012, the Wheatley Review provided recommendations for reform following the LIBOR scandal. But then we had the Foreign Exchange Scandal, and more recently the Bank of England alleged currency market manipulation scandal.
In 2011, The Vickers Report examined reforms to improve stability and competition in UK banks. In 2009, the Walker Review in looked at risk management and practice at board level and remuneration and the Turner Review investigated the causes of the financial crisis and proposed recommendations for banking regulation and supervision.
Exhausting isn’t it? And it’s clear what is the constant theme running through all of these reports – Culture. Today’s announcement by the Banking Standards Review Council confirms this, that a change in culture is required in the banking industry.
Easier said than done, I hear you say, and it is a very difficult concept to grasp. The challenge lies in managing the day to day compliance systems and controls and balancing this with the imperceptible aspects of behaviour and culture by understanding where one can impact on the other. Anthony Jenkins, CEO of Barclays has attempted this with his values programme, and we will see if this bears fruit. Here at ICT, we have looked at his challenge and we continue to work with the International Compliance Association http://www.int-comp.org to help develop courses that can meet these paradigms. For example both the Postgraduate Diploma and Diploma in Governance, Risk and Compliance address these very issues. And ICA is developing new qualifications to meet this challenge of helping to instil good behaviour and culture in banks. View more information on ICA qualifications here.