In the aftermath of the financial crisis, a whole series of far-reaching reforms has been imposed on the wayward banking industry.
The woolly “tripartite” regulatory system has been replaced, giving the Bank of England responsibility and accountability that will be hard to shirk. Sir John Vickers’ Commission on Banking has separated retail banking from its casino investment cousin, with the threat that institutions that breach the “ring fence” face break-up. Banks have been also told to take more care with their finances, and individuals may be held to account for failures.
Taken together, financial institutions have little choice but to become more conservative institutions. But sounder finances and stricter oversight is only half the battle. The lessons of the crisis will not have been learned until the free-wheeling, fast-buck culture that played so crucial a role has been tackled with equal vim. After all, changing the rules will have limited impact if those to whom they apply are perpetually out to dodge them.
When it comes to culture, Britain’s banks have a long way to go. A new generation of chief executives have talked a good game, stressing their new focus on integrity, say, or customer service, and making attempts to link bonuses to values as well as profits. Whether the rhetoric is making an impact is another question altogether, though – and, according to the Chartered Institute of Personnel and Development, the answer is not really.
Indeed, the picture painted by the organisation’s most recent survey of banking employees is deeply discouraging. Staff report bullying, unscrupulous management and rewards that are both excessive and often encourage bad behaviour.
The much-needed reform of our world-leading banking sector is only half done, then. And the hardest part is still to come.Reuse content