Brave new world (continued)

Will banks ever see ethical behaviour as normal?

You may not think it possible, but an attempt is being made to bring about this miracle. The brave agency that hopes to do this is the Banking Standards Review Council, the brainchild of Sir Richard Lambert. He has recently produced a set of proposals for the way this council should be set up, and how it should conduct itself.

It is to be an advisory body, and participation by the banks is voluntary. Some people have seen this as a fatal flaw in the scheme.

I’m not going to join in with this criticism. I’m pessimistic about the chances of success for this project, but I wish it well. The council may have no powers to force the banks to comply with its rulings, but it’s not attempting to punish criminal behaviour. Regulators already exist who should be carrying out that task.

If it’s not going to do something about the banks’ habit of defying the law, what’s the point of this new body?

We have a right to expect more from the banks than that they should stop stealing from us. They should also act with common decency towards their customers. For many banks this is an alien concept. The council aims to address this ignorance.

Moral and ethical behaviour is not best taught by threats and punishment. There’s more chance of success if this is done by persuasion and the setting of examples.

There are several suggestions in the proposals for ways to achieve this education. An interesting one is that, in the area of ethics at least, banks could learn from the public sector.

This isn’t as outlandish as it first appears. Whatever you think of the complaints system in the NHS, for instance, doctors and nurses have a clear Duty of Care to their patients. They are acutely aware of it, and it allows you to sue them if anything goes wrong. No-win-no-fee lawyers are queueing up to take your case. Try getting one to help you out if you have a problem with your bank!

It’s possible that bank employees could learn that they, too, have a Duty of Care to their customers. The regulators and courts may also come to understand this, given time. Don’t hold your breath, though.

While I was thinking about this, something occurred to me. Medicine is nothing like banking. Whatever I might think about the state of our banks, it would be unfair to expect their workers to behave like doctors and nurses. The decisions that they make when doing their jobs can’t really be compared with each other. Perhaps there are public sector workers who are better aligned with bank employees. Their advice could be more relevant.

Then I realised that there are a couple of banks which are publicly owned. They’re in the public sector. They will already have experienced the public service ethos. How useful would their advice be?

Not so fast. One of these banks is RBS, which deliberately ruins viable small businesses. This organisation hasn’t the first idea of what a Duty of Care is. Perhaps my idea wasn’t so good after all.

 

 

Related articles

• Banking Standards Review Council proposals (bankingstandardsreview.org.uk)
• Lambert defends banking watchdog’s lack of powers (itv.com)
• Capitalism is doomed if ethics vanish, says Bank of England governor (theguardian.com)
• Lagarde rebukes banks for refusing to fix pre-crisis culture (thetimes.co.uk)