With great power comes great accountability?December 2014
Do you remember when getting a fine was considered a bad thing? A sign that you’d flouted the law in some way? It was definitely something to be ashamed of at any rate. It doesn’t seem to be the same in the world of financial services. Banks simply set aside large amounts – of whose money I wonder? - to cover them.
The list of fines in recent times is staggering: Libor rigging, Forex rigging, sanction busting, mis-selling of faulty mortgage backed securities, gold price fixing, assisting tax evasion and mis-selling of personal insurance…
What is going on? If I operated in any of these ways and was found out, I’d soon be paying the price. Why are financial services operators any different? Indeed, a new report from Cass Business School and think tank New City agenda concludes that the ‘toxic’ and ‘aggressive’ culture inside British banks will take a generation to change.
The very recent RBS debacle over two senior executives’ ‘honest mistake’ while giving evidence to the Treasury Select Committee is a case in point. ‘Honest mistake’ or not, the only way banks will begin to get control of things is to make every director and every manager accountable for their actions. Let’s rewrite that famous Voltaire quote: With great power comes great…accountability.
Maybe we should take a leaf out of Iceland’s book. Former Landsbanki boss Sigurjon Arnason has recently been sentenced to 12 months in prison.
An Icelandic court found him guilty of market manipulation in the lead up to the 2008 financial crisis. And the former chief executives of Iceland’s two other big banks, Glitnir and Kaupthing, have already received jail sentences.
Hreidar Mar Sigurdsson, the former chief executive of Kaupthing - formerly Iceland’s largest bank - received a jail sentence of five and a half years - the heaviest sentence for financial fraud in Iceland’s history.
And real action does need to be taken. For while the most recent study from the Institute of Business Ethics (IBE) into the British public’s view of business behaviour shows that the public’s general opinion about ethical business behaviour remains the same as 2013 (and consistently leans more towards judging business as behaving ‘ethically’ than ‘not ethically’), it also shows that the British public seem to have become less ambivalent about business behaviour. In 2012, 15% expressed no opinion, but in 2014 only 2% do not have an opinion on business behaviour. So bad businesses beware! We are all getting more aware and sensitive to what you’re up to.
Philippa Foster Back CBE, IBE’s director, emphasizes that while business can take some heart in the report’s results that the British public’s opinion of business behaviour is improving, business is not out of the woods yet: “Business needs to listen to the public’s concerns about business behaviour and ensure that it addresses them, or they will lose the fragile trust that has been regained,” she said. “Consideration must be made of the opinion of the younger generations and those of the working classes who are experiencing business behaviour differently to the general public.”
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