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Blog series – Alison Cottrell

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…


‘It is not’, as Richard Breeden, a former SEC Chairman, once observed, ‘an adequate ethical standard to aspire to get through the day without being indicted’.

Compliance with regulation and legislation is, of course, a core responsibility of every bank and building society. Possession of a banking licence implies, however, a wider set of ethical and professional responsibilities and duties than those associated just with compliance (or indeed with avoiding indictment). A culture in which anything not explicitly prohibited or mandated is regarded as fair game, is not one that many would wish to see in the bank or building society they deal with (or indeed work for). And regulation itself, however prescriptive and wide-ranging, cannot determine ex ante every judgement an employee has to make or keep up with every social or technological change, or with human inventiveness.

If being worthy of trust requires more than compliance, it is also not to be confused with being trusted. Trust, whether of customers or clients in individual firms or of the public in the banking sector as a whole, may vary over time and with the way in which the question is asked, and be influenced by factors unrelated to the firm itself. It may also prove, in retrospect, to have been justified, insufficient or entirely misplaced. This is not to say that the level of trust does not matter. Trust in the banking system is fundamental to its operation, and a loss of trust in an individual firm can have wide-ranging consequences. But while trust is given, sometimes only after a considerable period of time, trustworthiness is a state or quality that is entirely in the hands of the firm itself.

Being worthy of trust requires, as a firm, each person to take responsibility not only for complying with regulation but also for serving their customers or clients honestly, reliably and competently1.

This is an environment in which minimum standards are the floor rather than the ceiling, with the latter determined by what ‘good’ looks like. It demands, of course, clear accountabilities, skilled risk management and consequences for wrong-doing; but it also needs employees who are able and ready to exercise professional judgement, processes that align recognition and reward with the firm’s espoused values, and a culture in which mistakes are remedied and learned from rather than ignored or associated with blame.

If the legal and regulatory structure, and a firm’s ethics and culture, are not consistent – if, in other words, motives are not aligned with actions – regulation will be gamed; and whenever this happens, policy makers and regulators will be called on to act in order to prevent a reoccurrence. Sector-level regulation will fill space that is perceived to have been vacated by ethics and culture, and each time this happens there will be more talented potential employees or non-executive directors who will decide to work in a sector other than banking. For banks and building societies, trustworthiness has both an individual and a collective dimension; a failure at the firm level has sectoral ramifications, and each firm shares responsibility for the sector of which it is a part.

Issues around demonstrating trustworthiness are not, of course, confined to banking, or indeed to the UK or the 21st century. The consequences of a poor ethical climate and culture in banking are, however, extraordinarily far-reaching, affecting the economy and society as a whole. For the UK banking sector, raising standards of behaviour and competence is not simply a challenge. It is a responsibility, and one that needs to be owned by every bank and building society today.

1. The three elements of trustworthiness as identified by Onora O’Neill

Alison Cottrell, Chief Executive, BSB

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.