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Law, ethics and culture: the if, the how and the what


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…

Reflecting upon the relationship between law, ethics and culture, a first thought that intuitively occurs is in the form of a simple syllogism: law is concerned with what is ‘right’ and what is ‘wrong’, ethics is concerned with the ‘right’ behaviour; therefore law is concerned with ethics. But, in that simple reasoning there is no mention of the word culture. And this is where I would like to start. If we want to include ‘culture’ in our reflection we should link it to ‘ethics’ with the preposition: of. Culture may indicate any set of behaviour and it carries no positive meaning per se. Think at the expressions ‘a culture of greed’, or ‘a culture of impunity’ which we have read and heard countlessly recently. Therefore, it is (the creation of) a culture of ethics that we should be concerned with. So the question now becomes whether there is a relationship between law and a culture of ethics. And here is where our simple syllogism becomes slightly more complicated (and philosophers can finally forgive me!). To pierce that veil of simplicity implies asking whether law is in fact concerned with ethics in the first place. To answer this question we would need to define what ethics means. However, this is a Herculean task which I cannot endeavour to explore in full here. I will therefore only select those aspects that are relevant to my reasoning ( lawyers typically do!)

Even though we may debate whether ethics differs from morality, we could all settle on the existence of a linkage between ethics and moral behaviour. Here a question arises whether law is concerned with moral behaviour and the answer is undoubtedly positive. Think of the role attributed to duress or good/bad faith in contract law. Or to intentions in criminal law. In fact, law is so versed into regulating subjective feelings that is able to attribute different degrees of culpability (think of aggravating and extenuating circumstances in criminal law). But ethics has also a strong public component and as such, law has an interest in ethical behaviour. Think of the consequences for society of collective unethical behaviour, as recently happened with banking organisations.

So, having recognised that law is and should be indeed thoroughly concerned with ethics, we can now investigate the relationship between law and a culture of ethics. We are also ready to finally refine our question and to ask whether the law has any role to play in the creation of a culture of ethics in companies. And here the answer is less clear than before in that the law has only a limited role to play. The law will provide regulators and regulatees with a set goal and often will identify the minimum set of organisational requirements that need to be put in place. The law will also give prosecutors powers to punish a breach. However, the law will not enter into the domain of business decisions, nor will give interested parties a detailed handbook. This role should be played by regulation, by self-regulation and by those private bodies that sit in between the public and the private domain. And in the banking sector, I believe this is the space that the BSB has the potential to fill.

Our very last question though relates to the how and the what. The BSB does not need to walk on a tightrope to avoid stepping on existing private and public bodies’ toes. It should work with them towards that common goal. In fact, this is in the interest of these bodies too. But it should also exploit its unique position to make sure that a culture of ethics is embedded in banks daily business activities, which is something other bodies may not be able to do. For instance, work can be done on banks corporate governance, in particular on the creation of governance mechanisms that would ensure ethical considerations are constantly taken into account. This would be of the utmost utility also considering the recent public policies on the matter that allow corporations some degrees of freedom. Freedom which a critical friend may be able to channel towards the achievement of that longed public good.

Costanza Russo, Senior Lecturer in International Banking Law and Business Ethics, Queen Mary University of London

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.