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Blog series – David Rouch

In advance of our event at the Bank of England on 21 March 2017, we asked interested parties to write on the theme: Worthy of trust? Law, ethics and culture in banking…

I’ll admit it: I’m a sceptic.  I have doubts about whether a focus on ‘ethics’ and ‘culture’ will generate trust in banking – not, at least, based on the way those words are often used.  They certainly sound reassuring, and if we were to chart growing discussion of ethics and culture in the financial services sector over the past decade we would probably see that only the proliferation of new rules has been faster.  But is this evidence of lasting change or do we, perhaps, find ourselves in need of that reassurance?

What do we really mean when we talk about ethics and culture?  Is there a consensus, or do the words simply draw a veil over difficult questions about ourselves, our institutions and the way we structure our common life?  Grapple with the substance and it can put us on the path to greater trust in banking and beyond (since problems that have afflicted the sector are not confined to it).  Default to using ‘ethics and culture’ as a talismanic incantation and we flunk it.

When we approach ethics and culture thoughtfully, what we are really asking is, what is ‘good’ – what sort of people we want to be and what sort of community we want to live in.  Things that are consistently good inspire trust.  This may seem like an enormous leap from the day-to-day business of financial institutions, but only because we are operating under a series of misapprehensions.

Let’s take a couple that need challenging.

First, that there are areas of life – financial transactions among them – that are in some sense morally neutral; a bizarre notion but one that is surprisingly deeply embedded.  I remember a discussion with a leading European regulator who claimed he had no ‘moral’ mandate for his work in regulating financial markets.  How can that possibly be?  If morality is to do with a conception of what is good, and he was pursuing what society had defined via legislation as good outcomes, how could this not involve some form of moral mandate?

We need not stop there. Even a simple financial transaction involves a sophisticated web of moral assumptions that relate to the essence of the transaction, what is a good outcome and the right treatment of the parties to it.  Yet talk to many and you might get the impression that the only relevant values are financial, and that these somehow exist outside a moral sphere.  An equally facile approach is sometimes encountered in legal processes, when the critical objective of impartiality is confused with being somehow morally neutral (as if being ‘morally neutral’ did not itself imply a moral stance).  Enough said.

Secondly, we should challenge the idea that the way we engage with our world – in the financial sector or otherwise – is consciously referenced to ethical or legal and regulatory standards, and that our behaviour is generally the result of mental deliberation that takes account of these things.  Largely, it isn’t.  Quite the opposite.  Think of your breakfast routine or your journey into work this morning.  Much of it runs on autopilot, reduced to effort-saving habit so as to free your conscious to deal with the issues that apparently really demand its attention.  But how were those embedded patterns of behaviour laid down?  In part, through conditioning by reference to some form of desired good – be it in terms of money, power, value, respect or otherwise.  If much of our behaviour is driven by our previously formed non-conscious, that has important implications for what might need to happen if aspects of it turn out to be ‘sub-optimal’. It might, for example, affect the way we use law and regulation to direct more clearly towards ends we agree are good, to habituate behaviour by reference to those ends and to raise practices to consciousness where they can be more readily addressed.

Put these two misapprehensions together, and a huge chunk of our behaviour – our existence – is largely excluded from all our talk of culture and ethics.  Challenge them, and individual and corporate life becomes a much richer and potentially fulfilling environment – one in which greater attentiveness to the nature of our desires and their formative influence can take us on a journey not so much of regulatory reform (with ethics and culture being apparently instrumentalised to that end), but of re-formation by reference to the good.  That way trustworthiness lies.

David Rouch, Partner, Freshfields Bruckhaus Deringer LLP

Senior Managers and Certification Regime

Exploring how the SMCR - and especially Certification - can be implemented in the most effective way across the sector.

The Senior Managers and Certification Regime is a major regulatory change that will affect all banks and building societies. Responding to recommendations by the Parliamentary Commission on Banking Standards, the government and regulators have together developed a comprehensive framework to ensure better accountability and responsibility for behaviour, competence and culture in banks and building societies. The new framework provides an opportunity for the industry to focus on and demonstrate a culture of professionalism. We are working with firms and regulators to facilitate this, including areas where a common approach across firms could support both the objectives of the regime and the skills and development of the people covered by it.


Evaluating whether a more 'professional' approach to banking would improve behaviour and competence across the industry.

The Parliamentary Commission on Banking Standards found that 'banking culture has all too often been characterised by an absence of any sense of collective responsibility to uphold the reputation of the industry', and argued that a greater focus on professionalism could be an answer to this. Working with a leading team at the University of Leeds, we are researching the issues around professionalism in banking. In particular, we are reviewing how professional qualifications are currently used across the sector, and at whether a stronger role for professional bodies, along the lines seen in some other sectors, like medicine or law, would help raise standards. To inform this work and develop a rounded picture of 'professionalism' and what it means in banking, we are surveying banks and building societies, professional bodies and a wide range of other interested groups, including consumer bodies and investors.


Providing an honest and impartial assessment to Boards of progress against objectives on behaviour, competence and culture.

The BSB assessment exercise presents Boards with an objective and impartial view of their firm's culture, identifying where things are working well and recommending areas for improvement. It draws on information not only from Boards and senior teams, but also from employees, investors (or members), trade unions, customer groups and other relevant bodies. In doing so, it will provide constructive challenge to each firm individually, while building a collective understanding of common issues across the industry, or sectors within it. We undertook our first annual assessment exercise in 2015 with ten firms (Barclays, Citi, HSBC Bank, Lloyds Banking Group, Metro Bank, Morgan Stanley International, Nationwide, RBS, Santander UK and Standard Chartered). The BSB itself will not publish individual assessment reports - each firm owns its own report - but key themes and messages will be set out in the BSB's annual report, the first of which will be published in Spring 2016. Given that Board engagement is central to the assessment work, only firms that have their headquarters in the UK are eligible for the full assessment exercise. All firms, including branches of firms headquartered overseas, will however be included in a focused membership-wide survey, which will allow each participating firm to benchmark itself against its peer group.



If your bank/building society has not responded adequately, or in time, to a complaint that you have already made, you can register your complaint with the Financial Ombudsman Service. Which offers a guide on consumer rights when taking a complaint to the Financial Ombudsman Service.


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If you work in the financial services industry and are concerned about any activities conducted by your employer or any other firm or individual, you may find the Financial Conduct Authority and the Prudential Regulation Authority's guidelines on whistleblowing helpful. It explains what constitutes whistleblowing, and what procedures are in place to respond to blow the whistle and how your anonymity would be protected. Public Concern at Work, the whistleblowing charity, also offers support and advice to individuals and employers about how to report concerns and how to establish whistleblowing frameworks.


If you are seeking the services of an independent financial adviser, Unbiased may be able to help, or if you are looking for more general financial guidance, the Money Advice Service may be a useful place to start.