Britain’s major banks have received their first report cards from the body set up to improve standards and bolster the industry’s reputation in the wake of the Libor-rigging crisis.
Dame Colette Bowe, chair of the Banking Standards Board (BSB), likened the assessments of the behaviour and culture inside the major banks to the reports delivered by auditors, which are signed off by the partner at the accountancy firm which has assessed their books and is included in their annual reports. The BSB will publish its own annual report in the spring.
“The report that goes back to the banks will be signed by me,” said Bowe, who was appointed to chair the new body after a selection process led by Bank of England governor Mark Carney.
She expected the reports to be published in some form but was not specific about how the banks would make them known - although she suggested there could be some reference to the assessments in the upcoming annual reports.
The reports have been sent to the founder members: Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland, Santander and Standard Chartered and Nationwide Building Society. They have also been sent to three banks which have seats on the board of the BSB, high street bank Metro and the investment banks Citi and Morgan Stanley.
Bowe said: “I wrote to the chairman of each of the seven founding banks and three on the board and said [to them] ‘you tell us what it is you think your bank is there for, what are you trying to achieve, how you are trying to achieve it and how do you know [you are achieving it]’”.
A team of interviewers then spoke to 200 groups of staff inside the firms to assess whether the goals and ambitions set by the board and its management were filtering through and being achieved.
The aim is not to require the firms to achieve a single standard of behaviour but meet their own internal goals to boost their standing with the public after a string of scandals, ranging from rigging Libor to mis-selling payment protection insurance.
Alison Cottrell, hired from the Treasury to be chief executive of the industry-funded body, said: “Individual firms will start looking at culture from different starting points. For some institutions it may be ‘how do we change our culture’, for others it may be ‘how do we maintain our culture’, for other firms the challenge could be ‘how do we create an identity and hold on to it’.”
The idea for the annual report cards came from Sir Richard Lambert, former Financial Times editor and former chairman of the employers’ body the CBI, who conducted a review for the major banks on how to improve their reputation.
However, it is not immediately clear how banks intend to use their reports. The BSB does not have regulatory powers, such as being able to fine firms or reprimand them, and the reports are meant to fend off further regulatory intervention.
Lloyds Banking Group confirmed it had received its report: “The Banking Standards Board’s assessment report shows that we are making good progress in changing culture throughout the organisation. It included interviews with both management and staff to see how far culture and behavioural change is being embedded in the business. The report does point out we can do more and the group continues to make further improvements in our goal to become the best bank for our customers.”
Barclays – whose former chairman Sir David Walker was a proponent of the BSB – said it was confident the findings of the report “will provide additional perspective, alongside our own internal metrics, on culture and standards across the bank”. HSBC does not expect to publish its report.
Cottrell said the BSB was also working the University of Leeds to establish ways to improve the professionalism of banking by analysing the qualifications currently available. The project is expected to be completed in mid-2016 and will be used to decide if bankers should be required to swear an hippocratic oath in the way that doctors do.
Bowe added that an oath would only have substance if a professional body stood behind it. “An oath on its own without a professionally developed structure to support it is [nothing more than] words on a page,” said Bowe.
