Today the Banking Standards Board (BSB) is bringing together the president and chief executive of the New York Federal Reserve Bank, William C Dudley, the governor of the Bank of England, Mark Carney, and the lord chief justice of England and Wales, Lord Thomas of Cwmgiedd.
On both sides of the Atlantic, significant efforts have gone into repairing some of the damage from the financial crisis, and addressing some of the underlying causes of the numerous scandals that we have seen in banking. Regulation is now much tougher than it was, senior leaders in banking are more accountable for their actions, and reward and incentive structures – in banking, as elsewhere – have come under greater scrutiny.
These measures and more have been important and necessary. But tougher laws and regulations on their own are not sufficient. Rules can be gamed; they can also never account for every eventuality. The responsibility for high ethical standards and professional competence sits not with the regulator, but with firms themselves.
So, the theme for today’s discussion will be “Worthy of Trust? Law, Ethics and Culture in Banking”. All three – law, ethics and culture – need to be fully aligned, and aligned in the interests of the customer that the banking sector exists to serve.
This is not about banks being trusted. It is about banks being trustworthy.
A trustworthy banking sector supports growth and prosperity across the economy, and trust is surely a core competitive advantage for any financial centre.
As deputy chairman of the BSB, I was encouraged by some of our 2016 Assessment findings, particularly the focus of many boards and executive teams of banks and building societies on culture and ethics in their organisations, and their openness to external review and challenge.
Our Assessment may make for uncomfortable reading at times for firms, but senior practitioners tell us that it helps them to actively monitor, understand and manage their culture.
But there is no room for complacency. Much remains to be done. There are still deep-seated attitudes and behaviours that need to change. Before they can, we need to understand what – almost 10 years on from the financial crisis – is still causing staff in some firms to have ethical concerns at work, or feel unable to challenge poor behaviour when they see it, despite efforts by policymakers, regulators and firms themselves. This will be an area of further focus for the BSB in 2017.
Another will be the wellbeing of the many staff who work in banks and building societies across the UK. While at the TUC, I saw the impact that stress, anxiety and depression can have on individuals’ lives, and on their productivity at work.
I was therefore extremely concerned that our Assessment found, across firms, three in five employees feeling under considerable pressure to perform at work and over a quarter reporting that working in their firm was having a negative impact on health and well-being.
In the months ahead the BSB is going to be working in partnership with the Bank Workers Charity and other organisations to identify practical steps that could help promote and improve employee well-being and personal resilience.
And coming full circle back to the theme of today’s event, I hope the BSB’s new Professionalism Forum will make an important contribution. This group will, over the course of 2017 and early 2018, bring together firms, professional bodies and qualification providers to explore practical ways of helping to strengthen further competence and ethical behaviour across the sector.
Fostering and developing professionalism is core to ensuring that the many thousands of committed, hard-working staff in banks and building societies can be proud of what banking contributes to the economy and to society as a whole. And it is essential if the banking sector is to be worthy of the trust we all want – and need – to place in it.