There are six women sitting in the small and sunlit serviced office down the street from the Bank of England. Could the start-up staff of the Banking Standards Board be sending a subliminal message of how to make wayward bankers – who are almost always men – behave better? Their boss, Dame Colette Bowe, who, I’m assured, will add more men to the team soon, picks her words carefully to flesh out the task ahead.
“There is research that says people tend to trust their own bank but have a much lower opinion of banks in general,” she says, slipping off her heels after tackling the coffee machine. “They have got to make themselves worthy of being trusted. That is not a matter of PR, it is a matter of doing things better over a sustained period of time.”
Dame Colette, 68, an economist who cut her teeth in the civil service, has regulated everything from life insurance to broadband, amassing jobs at the same time as a reputation for getting things done. In chairing the BSB – not a regulator, but a body recommended by the Parliamentary Commission on Banking Standards to demonstrate that bankers can improve their own working culture – she fully understands she is there to be shot at.
“You have got to do it with the acknowledgement that you have made mistakes, you have got to do it as a proper, serious evidence-based job of work and – I am trying to not sound like Mother Teresa here – do it in a proper spirit of acknowledgement that people try hard.”
Can Dame Colette be talking about the same industry? She doesn’t believe bankers are all bad, “no more than any other industry, actually”, but that a few have done bad things. “There are hundreds and thousands of people who work in the industry who have been really badly let down. Sometimes they don’t like even acknowledging where they work. That is what really drives me into this – not some daft feeling that I could come galloping in and tell everyone what to do.”
Regulators have made life much tougher for banks. Conduct costs – fines and compensation for everything from fiddling foreign-exchange rates to mis-selling payment-protection insurance – have reached tens of billions of pounds. Finally, individuals are being held to account too. Tom Hayes, a UBS and Citigroup trader, is standing trial for allegedly rigging the Libor inter-bank lending rate.
More is to come. The Bank of England’s Fair and Effective Markets Review (FEMR) is shortly expected to suggest greater powers to ban those involved in market manipulation and a new senior managers’ regime is designed to clarify lines of responsibility. The BSB – with Citizens Advice Bureau chief Gillian Guy and former Treasury Select Committee chairman Lord McFall on its board – will operate in tandem.
There is still a lingering feeling that the banks are being forced to behave better rather than willingly cleaning up their act. Dame Colette is not sure if the culture improves just because punishments become greater.
“There are limits to regulation, to how far you can try to force conduct down certain channels. In the end, people have got to say: OK I get it, this is how we are going to do it.”
And how is she going to do it? There have been some outlandish ideas, such as making bankers swear an oath of good behaviour, about which Bowe is “a bit unenthusiastic”. There won’t be a new code of conduct either, because “this industry is riddled with them”. The BSB will take soundings about what the six banks and one building society that created it are already doing in this area. More are expected to join soon, to subject themselves to regular review.
High up Dame Colette’s agenda is looking at options for professional certification. In the past, it has been judged that asking bankers to gain a single qualification is too hard because a teller in a high street branch has little in common with a City trader. But if it brings about trust, Bowe thinks it would be no different to what is asked of a medical practitioner. “I think it is perfectly possible to establish a more widely accepted concept of professionalism in banking while acknowledging that people in different parts of the industry do different things. It is going to be an early area of focus for us.
“What it boils down to is not just having a business card that has got some letters on it, but actually knowing the person you are dealing with has a high standard of professional training.”
The medical analogy might extend to the equivalent of the General Medical Council, whose fitness to practise panel strikes off repeat offenders. Also in her sights is scrutinising the oddly spotless job references that let errant traders slip from institution to institution – and how the message of good behaviour preached from the top is lost among middle management.
Dame Colette might not have been an economist were it not for Lord (Maurice) Peston, father of BBC economics editor Robert, who let her switch to his newly founded economics department after initially studying French at Queen Mary College, London.
“He took a punt on me and I owe him my entire career,” she says. Until her college interview, the daughter of a Liverpool Persil salesman had never been to London. After study she joined government, working on the privatisation of the shipbuilding industry at the “high noon of Thatcherism”. It was then that Trade Secretary Lord Tebbit picked her to become his press officer.
They are still close. A tear rolls down her cheek as she recalls the morning 31 years ago when she awoke to news that a terrorist bomb had ripped through the Brighton Grand during the Conservative Party conference and Tebbit and his wife were missing under the rubble.
But it is a very different episode that will forever mark Dame Colette’s time in Whitehall. The Westland affair, an infamous government battle over the ownership of a helicopter company, propelled Bowe on to the front pages when orders were given to leak a document that smeared Lord Heseltine, who was at odds with her boss at the time, Lord Brittan. Asked what she learned from that incident, she laughs, adding: “Keep your mouth shut.” I’m not sure whether it’s her reflection almost 30 years on, or a friendly order. Either way, it hardly harmed her career prospects.
“As Mao Tse-tung said about the French Revolution, it’s too early to tell.” Still, Dame Colette isn’t in a rush to go into details. “This is an old-fashioned view but I think what happens between civil servants and their ministers has always been kept confidential and I think going around blabbing about things is deplorable, actually.”
What the Official Secrets Act doesn’t preclude is her view of Brittan, whose death earlier this year was overshadowed by allegations that he had failed to act over a paedophile dossier he was handed while Home Secretary. Bowe says: “It is totally regrettable. He was a person for whom I had the highest regard and as our lives went on I became friendly with, not just an employee.”
By the time she was 40, Dame Colette was ready for a change. After a brief stint in broadcasting regulation, she switched to the City by going to work for former Barclays chairman Sir David Walker at the Securities and Investments Board, a forerunner to the Financial Services Authority. From there, she ran mutual funds for merchant bank Robert Fleming until it was sold to Chase Manhattan. Such a full career might explain why she never married. And now she is back in the City, leading a clean-up.
CV: Dame Colette Bowe
Education: Went to Notre Dame High School, Liverpool. Studied at Queen Mary College, University of London (BSc Economics and PhD) and London School of Economics (MSc Economics).
Career so far: Joined civil service as an economist in 1975, becoming Department of Trade and Industry press secretary in 1985. First regulatory job in 1987, as public affairs director of the Independent Broadcasting Authority. Chief executive of the Personal Investment Authority from 1994 and moved into business in 1998 as executive chairman of Save and Prosper. Deputy chairman of Thames Water from 2001, founder chairman of the Telecoms Ombudsman Service in 2002 and board member of Morgan Stanley Bank International from 2005. Appointed chairman of Ofcom in 2009, chairman of Electra Private Equity in 2010, board member of the UK Statistics Authority in the same year and founder chairman of Banking Standards Board in 2014.
Personal: Lives in north London. Plays the cello. A lifelong Liverpool FC fan.Reuse content