Julian Knight: Integrity isn't just the absence of corruption

I want to discuss the Kremlin – as the headquarters of Royal Bank of Scotland was nicknamed under the leadership of the disgraced banker Sir Fred "The Shred" Goodwin. As you can probably guess, it wasn't a jolly place.

A friend who got a job there went from being a relaxed, enthusiastic guy into a haunted figure in a few short months. A year later he resigned and described the culture as one where every perceived mistake was pounced on and people were afraid to tell it straight.

The culture at the Royal Bank was so dysfunctional that the bank lived a collective fantasy. Everything was rosy and anyone who disagreed with the line from upon high was either a traitor or spineless.

The Financial Services Authority has now released its report into the goings-on at RBS. It concluded that the bank made a series of bad decisions – paying a huge sum for ABN AMRO, for instance – but there was no lack of integrity. As a result, the FSA says it will not be taking enforcement action against Sir Fred and the other senior managers at the bank.

Yet how does the FSA judge integrity? If it means there was no fraud and dishonesty, I can well believe that. After all, many of the executives lived in a state of terror and who would be brave enough to try to rip off Fred The Shred? But integrity is a lot more than simply not being corrupt: as far as senior managers are concerned, it's about the culture created.

A bank's headquarters is never going to be a happy-clappy place but it shouldn't be the Kremlin either. The fact that RBS was just such a miserable place to work, one filled with rotten attitudes, is precisely the reason why it failed so spectacularly.

Fresh-thinking Fields

In Frank Field's latest incarnation as the Government's advisor on poverty the Labour MP is showing that he's far from being past his best: he's still a big brain on the major social challenges we face. In particular, his assertion that we shouldn't just focus on income as a measure of poverty is spot on. We may not have overt corruption in this country, but nepotism and cronyism is rife – who your parents are still counts a lot, rather than raw ability. Poverty can be measured in part by life chances and opportunity to scale the career ladder. A crude income measure of poverty dates from the start of the last century and Field is right to say we need to move beyond this.

New year clear-out

It maybe a bit early to start thinking about the new year but one thing I'm really looking forward to in 2011 is the Office of Fair Trading (OFT) finally bringing the loathsome debt-management firms to book. Already it has put more than 100 firms on notice that they risk losing their credit licences unless they treat customers more fairly.

Last week, the OFT refused an application from debt-management firm Baker Evans to call itself The Bankruptcy Helpline or The Insolvency Helpline. The OFT denial was based on the fact that the name implied that the firm's service was somehow impartial: it clearly isn't as debt-management firms want you to take out an Individual Voluntary Arrangement which earns them massive fees.

The case of Baker Evans is far from the most blatant: we have seen firms using phrases such as "free" in their names when patently they are not. Some have even put up websites closely resembling bona fide bodies such as the Consumer Credit Counselling Service or Citizens Advice. The tactics of the industry have often mirrored those behind the dodgy spam emails that daily drop into your inbox.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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