The CISI’s response to the FCA’s decision to shelve the review of culture in banks. Are banks being let off the hook?
Although the voices raised in protest at the decision of the FCA to drop its proposed review of culture in banks were understandable and predictable, we do not believe that the decision represents ‘letting the banks off the hook’, or anything of that nature.
The reality is not that banks, or indeed anyone else, will only focus on culture at the point of a metaphorical gun, but that they will act in what they consider to be their own best interests which, it is abundantly clear to them, at the moment and for the next few years, involves rebuilding their heavily tarnished reputations. And a major part of that involves examining all aspects of what goes into building or destroying their reputation, and ensuring that everyone in the company understands what they are expected to do and how they are expected to behave and acts accordingly.
The CISI’s involvement over the past 18 months and which is ongoing, with a number of major international banks with significant presence in the UK and indeed around the world demonstrates quite clearly that they are serious about achieving culture change, but we do wonder why they are so reticent about making the fact public. Training should not be seen as a sign of inherent weakness, but as a demonstration that they understand and accept their responsibilities.
Banks are serious about achieving culture change, but we do wonder why they are so reticent about making the fact public
The FCA argues and we agree that the nature of its regulatory interactions with banks provides an ongoing opportunity to take their ‘ethical temperature’ in a more effective manner than possibly having a ‘cultural inspection’, which by its likely nature would give banks the opportunity and temptation to showcase the best bits in their cultural programme, rather than focusing on culture as a continuous process.
The FCA has commented that the Banking Standards Board (BSB) is already examining culture within banks, and because of the BSB’s status they are well placed to be able to carry out such a review without, one might suggest, raising any of the tensions which a visit from the regulator will inevitably raise. However, until any of the work of the BSB is made public, we cannot comment on the success of their approach, but we have no reason not to be fully supportive of them.
We would take this opportunity to mention that the CISI, in partnership with the Institute of Business Ethics, operates a certification programme, Investing in Integrity, whose aim is to review how successful firms are in introducing and embedding a code of conduct into their organisation. This has been taken up by a number of major industrial and service companies, but financial services and banking in particular seem reluctant to put themselves to the test.
Being more open about the actions that they are taking would, we believe, be seen as a positive step which would help to counteract the negative perceptions resulting from the FCA announcement.