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Can bankers be trusted?

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…

Can bankers be trusted? It’s a glib question, though a legitimate one. When I tell people that a lot of my work focuses on improving integrity in the financial sector, the most common response I get (outside of laughter) is the rhetorical question, ‘Isn’t that an oxymoron?’

After a decade teaching literally thousands of financial services professionals, I know first-hand that ethics in banking is not a paradox. I know how honourable and upstanding the majority of professionals in the financial industry are. And as a professor, I can guarantee you that academics are no way immune to the same types of problematic behaviour (greed, dishonesty) that bankers are often accused of.

However, there are aspects of the financial services industry that make it more difficult to consistently resist greed, selfishness, or dishonesty in the course of one’s professional obligations compared to some other industries.

A major one is that is that the inputs, processes, and outputs of the financial services industry are ‘money’. Research shows that priming people with money makes them less helpful, less interpersonally attuned, and more likely to engage in unethical behaviour.

A second one is that many professionals in financial services are highly motivated to meet quantitative targets. Unrealistic or ‘stretch’ quantitative targets often lead to unethical behaviour, as scandals at Barclays, Lloyd’s and Wells Fargo testify.

Worse, these problematic tendencies are core to the professional identity bankers’ associate with their profession. In a clever study, the behavioural economists Alain Cohn, Ernst Fehr and Michel André Maréchal asked a group of investment bankers to play a game where they were asked to toss a coin privately ten times. They were paid for the number of times they reported having tossed “heads”. However, before they did so, half the bankers answered a series of questions designed to make their identity as a banker more salient (such as, “What is your function at this bank?”). The other half did not. Those who were thinking about themselves as a banker when they went to flip the coins reporting tossing substantially more “heads” than chance—suggesting they were being dishonest in their reporting. They also tossed substantially more “heads” than those who weren’t thinking of themselves as bankers.

How do we change this culture? Just because the financial industry has some elements working it doesn’t mean that positive change isn’t possible. Many of the solutions traditionally proposed, such as limiting bankers’ pay, have been discussed at length by those on both sides of the pond (like here or here), but meaningful reform or regulation in this domain seems an uphill battle to say the least.

In writing this blog, I was asked to offer a new or different voice in this conversation. So below I offer some food for thought, using ideas derived from social science, of interventions that could support a culture of integrity in the UK financial services industry.

One thing to think about is how to humanise the work that financial services professionals do. It is difficult to keep in mind that at the end of the fancy trades and complex transactions that many banks engage in are customers – from university students trying to keep out of overdraft, to pensioners whose fixed incomes depend on the quality and risk profile of the deals those bankers make. It can be hard to remember that when one’s job consists of staring all day at screens covered in spreadsheets. It might be easier to remember the end client if the traders who worked on those transactions had to meet them. Decades of research confirms that negative behaviour is exacerbated when we neglect or avoid thinking about the humanity of those whom our actions effect. Though less research has focused on the positive consequences of attending to the humanity of those whom our actions effect, I would bet that risky trading would be curbed if those making the trades were regularly required to take a group of pensioners affected by those trades out to tea.

Another thing worth thinking about is how to move beyond quantitative targets for performance. Organisations tend to resist moving away from hard targets, as they appear clear and objective, and have delivered performance in the past. However, we need to think more creatively about how to motivate and incentivise the behaviour we want to see. This might involve more qualitative assessments of customer satisfaction, focusing on client retention and referrals rather than sales, or creating cultures more tolerant of mistakes.

Finally, research shows that being moral, and appearing moral to oneself, is important to nearly everyone. You know how, when people are admitting their failures or mistakes, they often say, “But that’s not who I am”? Making individuals’ own personal identities relevant to the decisions they make in the course of their job will almost certainly raise the quality of the behaviour we see in any organisation.

In short, there are lots of evidence-based ways we know would be likely to improve behaviour in financial services. We just need to be courageous and creative enough to try them.

Celia Moore

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.


If you have a problem or query relating to your financial affairs, or are seeking personal finance advice or guidance, there is free, impartial information available from the following organisations:


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.