Press Release: Virtuous Banking: Placing ethos and purpose at the heart of finance

28^th July 2014

Bankers must swear a “Bankers Oath” to turn back the tide of scandal

Think tank ResPublica calls for the introduction of an oath for bankers similar to the Hippocratic Oath in order to raise accountability and standards in banking.

The lack of public trust in UK banking is an ongoing concern for both the industry and Government. Hardly a week goes by without another banking scandal hitting the headlines, and the reputation of bankers continually finds new lows. For ResPublica, the embarrassing merry-go-round of scandal and recrimination will only stop once bankers truly embrace professionalism and commit to clear ethical standards. These are the conclusions of ResPublica’s latest report, Virtuous Banking: Placing ethos and purpose at the heart of banking, which was funded by the Economic and Social Research Council (ESRC).

ResPublica argues that, despite nearly five years of financial reform, the job of banking reform can best be described as half complete. Despite much legislation, our small businesses lack the finance they desperately need; customers are bereft of good advice; and consumer trust and confidence in the banking sector is at an all-time low. But why is it, after all this time, that we do not have the banking sector we deserve?

This report suggests that this is because policy makers have pursued the wrong type of reform. The Government has wrongly focused purely on regulatory or prudential issues, but has ignored the crucial root cause of the banking crisis: an inherent lack of virtue amongst our banking institutions. Because of this, more of the same from Government and the industry will not be enough to stem the tide of scandal.

Instead, virtue and responsibility must be fervently encouraged through higher levels of banker personal responsibility. This is best promoted by developing a better sense of professionalism and ethics. Key to this is requiring all members of the banking profession to affirm a new Bankers’ Oath.

In medicine, the Hippocratic Oath provides a centre-piece for personal responsibility in the profession. We believe that the Bankers’ Oath could perform a similar function in banking and we recommend that the British Bankers’ Association, the Building Societies Association and the new Banking Standards Review Council all adopt this oath for all of their members.Such a statement of intent from the banking industry would be a momentous event, and would be the turning point for how the public regard our banks.

Phillip Blond, Director, ResPublica said:

“As countless scandals demonstrate, virtue is distinctly absent from our banking institutions. Britain’s bankers lack a sense of ethos and the institutions they work for lack a clearly defined social purpose. In order for us to have the banks we desperately need and the country deserves, bankers must recognise the good, do the good, and be good. The Bankers’ Oath represents a remarkable opportunity to fulfil their proper moral and economic purpose, and finally place bankers on the road to absolution”

Sir Richard Lambert, Chair of the Banking Standards Review Council, welcomed the report saying it was “full of brilliant ideas” agreeing that financial reform has so far focused too much in regulation.

Paul Chisnall, Executive Director of the British Bankers’ Association, said “Restoring trust and confidence is the banking industry’s number one priority. But meaningful cultural change in an industry as complex and diverse as banking takes time.” He added that a wide-ranging banking oath “very well could be part of the answer”.

Other recommendations from the report include:

• Reclassify small businesses as ‘consumers’ to ensure banks treat struggling firms fairly
• Introduce tougher fiduciary duties for bank shareholders to ensure our banks are held to account
• Localise the British Business Bank through LEPs to promote local banking

Sir Richard Lambert, Chair of the Banking Standards Review Council, will be delivering the keynote speech at the launch, which will be followed a panel discussion including Alison Robb, Group Director for Nationwide Building Society; Phil Chisnall, Executive Director of Financial Policy Operations at the British Bankers’ Association; and report authors Professor David T. Llewellyn of Money and Banking at Loughborough University and Professor Roger Steare of Cass Business School.

Representatives from banks including HSBC, Lloyds Banking Group, RBS, TSB, J P Morgan, UBS and Standard Chartered, as well as representatives from Deloitte, EY, Freshfields, KPMG, PwC and the City of London Corporation, will be attending the event which will be held on Tuesday 29th July at 2pm at the Financial Times, One Southwark Bridge, London, SE1 9HL.

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Contacts:

For further information, embargoed copies of the report and interviews with Phillip Blond, Director of ResPublica, please contact:

Elliott Mears, elliott.mears@respublica.org.uk, 07775 801726

Notes to editors:

1. Virtuous Banking: Placing ethos and purpose at the heart of finance will be available for free download from www.respublica.org.uk on Tuesday 29th July 2014.
2. The ResPublica Trust (which operates under the trading name ResPublica) is an independent, non-partisan think tank. We focus on developing practical solutions to enduring socio-economic and cultural problems in the UK. Our practical recommendations for policy implementation seek to strengthen the links between individuals, institutions and communities that create both human and social capital.
3. The Economic and Social Research Council (ESRC) funds research into the big social and economic questions facing us today. We also develop and train the UK’s future social scientists. Our research informs public policies and helps make businesses, voluntary bodies and other organisations more effective. Most importantly, it makes a real difference to all our lives. The ESRC is an independent organisation, established by Royal Charter in 1965, and funded mainly by the Government. www.esrc.ac.uk
4. The text for our proposed Bankers’ Oath can be found below.

“I swear to fulfil, to the best of my ability and judgement, this covenant:

I will do my utmost to behave in a manner that prioritises the needs of customers. It my first duty to provide an exemplary quality of service to my customers and to exhibit a duty of care above and beyond what is required by law.

I will apply myself to ensuring that the work that I perform is in line with values that engender the responsible creation of value. It is my duty to conduct my business in an ethical manner and to ensure that my actions impact positively on the wellbeing of people both inside and outside my enterprise.

I will confront profligacy and impropriety wherever I encounter it, for the conduct of bankers can have dramatic consequence for society.

I will remember that I remain a member of society, with special obligations to the financial security and wellbeing of my customers, their families and the communities they reside in.

If I do not violate this oath, may I benefit from the prosperity that comes from serving customers well. May I always act so as to preserve the finest traditions of my calling and may I long experience the joy that comes from supporting the needs of society.

This oath I make freely, and upon my honour.”

The Bankers’ Oath

Press enquiries to press@respublica.org.uk.

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