Re-building bank trustworthiness a long haul

The Banking Standards Board (BSB) has published its first annual review of progress by UK banks and building societies in re-building trustworthiness in banking.

Dame Colette Bowe, Chairman of the BSB commented that “Like all businesses, firms in the banking sector have responsibilities that go beyond compliance; regulation, although vital, isn’t the answer to every question.

A key priority has been an assessment of progress in terms of behaviour, competence and culture i.e. how aligned is what firms say to what is actually happening on the ground.

6 themes supporting culture change have been used:

• Alignment with purpose, values and culture

• Effective management of culture and conduct
• Broad-based and aligned leadership
• Alignment of incentives and rewards
• Encouraging challenge and speaking up
• Effectiveness of staff training and support

Dame Colette added:

“All of these cross cutting themes are big issues – some of the essential building blocks of corporate culture – and can only be tackled through coherent and concerted effort. Every firms starting point is different but the collective challenge for the sector is very large".

"Rebuilding trustworthiness in a credible and sustainable way will be a long haul but a start has been made”.

The Governor of the Bank of England, Mark Carney, commenting on the BSB’s first year, added;

“This initiative is hugely important to the development of the whole of the banking industry. It is no surprise that the UK is now seen as out in front, when it comes to non-regulatory moves to tackle behaviour, competence and culture”.

Alison Cottrell, Chief Executive added:

“It is not the BSB that will raise standards in the banking sector; only the industry itself can do that. It is no small task, and it will take action and time“.

Given the regulatory focus on culture and indeed the extent of fines for misconduct, it is not surprising that the BSB is focused on these areas.

At one level, it is the right thing to do. At another, the consequences for not addressing poor customer outcomes, market integrity failure and/or distortion of competition are compelling in their own right.

As they say, every journey starts with a first step…..