In his widely anticipated 33-page Banking Standards Review, the former chief executive of the Confederation of British Industry and ex-editor of the Financial Times revealed that only a “minority” of individuals working in the banking sector hold any specific qualifications.
He said: “The fact is that the number of people with banking qualifications has fallen over the past 25 years, both as a proportion of what has become a much larger industry and in absolute terms.
“So although more than 100,000 individuals employed in UK banking today hold a qualification from, or are members of, a recognised professional body for bankers, this is a minority of the total workforce.”
In his report, published on 19 May, Sir Richard said the reasons for the drop in professional standards, which include a change in banking culture from stewardship to sales and cost-cutting, have “not brought great benefits for customers”.
His recommendation that a banking standards review council should be established has been accepted by the industry, which he described as motivated by “short-term profits and the chase for shareholder value”.
Sir Richard said the industry-funded body must require banks and building societies to “commit to a programme of continuous improvement” in culture, competence and customer outcomes, reporting back to the council once a year. The body will then publish its verdict on the banks’ progress.
It will also aim to set standards of good practice in areas that have generated much bad publicity for the banking sector in recent years, such as their approach to retail sales incentives and their treatment of small businesses in distress.
Andrew Tyrie MP, chairman of the Treasury select committee, said: “Wide-ranging reform is needed now to secure improvements to standards. High on the list are reforms to banking remuneration, corporate governance and regulatory supervision. These reforms must be implemented as a package if trust in banking is to be restored.”
Kevin Morgan, managing director of Hertfordshire-based Consilium Financial Planning, said: “I am always wary of further tiers of bureaucracy that make life more difficult and costly for consumers.”
Simon Culhane, chief executive of the Chartered Institute for Securities & Investment, said Sir Richard should have “pushed strongly” for membership of and adherence to standards set by professional bodies.
“This would give the public greater confidence that independent bodies were heavily involved in raising standards of integrity,” he said.