Something is seriously wrong in financial services
Recent banking scandals give rise to the question of what punishment would be appropriate to ensure that they never happen again.
Something is wrong, seriously wrong, when one of our leading financial institutions could find itself accused of laundering money for brutally savage drug dealers who have been accused of turning a reasonably moderate developing economy in to a narco-state.
Worse than that, over the last decade, these murderers, morally and literally, have been responsible for 50,000 deaths, all connected with actual or presumed drug dealing.
As if that is not bad enough, we are drifting in to a swirl of ethical debris when other leading banks are caught up in allegations of fixing the lending benchmark on which commercial lending rates are based. What is more, from all available evidence, it now appears as if the leading regulators, or senior individuals within those organisations, were aware, or highly suspicious of the wrongdoing, yet clearly failed in their duty to raise the alarm.
We, as an industry and society, are in a mess which we can either do our best to clear up or, failing which, we send a message to future generations that criminality or basic dishonesty are fine, as long as you can get away with it.
As a society we have already institutionalised corruption-lite, from pulling strings to get little Johnny work experience, and are on our way to formalising corruption-concentrate, maximising bonuses.
We live in a business climate in which individuals and firms often pay lip service to ethical behaviour but in practice fall far from the desired performance.
This can range from managers espousing theories of listening and valuing employees, to those who pretend that the legal structure of a business, mutuals against Plcs, is the be-all and end-all in its own right.
However, consumer expectations are reflected in the way they are treated in face-to-face contact and in the way promises are delivered.
The legal structure of a business does not determine its customer care, its corporate charging principles nor indeed the rudeness and lack of courtesy of staff.
Being a mutual may be a first step, in that it sends the message that members/customers come first, but it is more than that. The reality is that banks have shot themselves in the foot, just as they did after the passing of the 1986 Financial Services Act, which created the occupational specialism of IFAs. Mutuals have a wide open goal.
With the retail distribution review in reality handing over the supply of low-cost simplified financial products to the banks, it was theirs to lose – and they have messed up.
Despite a marked resistance, it is still not too late for the regulator to take in to consideration all the developments in the market since the launch of the RDR debate, including the corrupt Libor-fixing scandal, allegations of money laundering for Eastern European oligarchs and Latin American drug dealers and make some last-minute changes.
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