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#Financial Crime Prevention

Responsibility and accountability... more than words

International Compliance Association

accountability , banks , culture , Financial , responsibility

The Parliamentary Commission on Banking Standards was set up to look into professional standards and culture within the UK banking sector. Its recent report – "Changing Banking for Good" – puts forward several recommendations. Among these are proposals to make greater individual responsibility within banks a reality, particularly amongst senior bankers.

The Commission’s use of the term "responsibility" is both interesting and important. Responsibility. Not "accountability".

Individuals feel responsible. They accept responsibility. By contrast, they are held accountable. But this is more than an exercise in semantics. The public debate around the future of banking has been heavily focused on ensuring accountability following concerns that senior bankers have not been properly brought to book for their role in the crisis. But reforming our banks to achieve greater responsibility is potentially a bigger undertaking than simply ensuring that individuals are held to account.

This is because responsibility, while able to incorporate accountability, is an altogether broader issue. For example, it could be said that an individual who feels a genuine sense of responsibility is likely to observe both the spirit and the letter of the rules of play, whereas feeling accountable merely implies adherence to the latter. This is an important distinction if the aim is to initiate genuine and lasting cultural change within the banking sector.

Compliance practitioners often talk of the need to “embed” a compliance culture within an organization, and the fact that this relies upon the “tone from the top”. Put differently, it requires decision makers within organizations to have regard for both the spirit and letter of the regulations, rather than regarding compliance with them as a necessary evil. By contrast, where individuals’ decisions are motivated exclusively by the fear of sanction (rather than out of a desire to “do what is right”) one result may be a mechanistic, box-ticking approach. Worse still, if individuals only have regard for the letter of the law rather than its underlying spirit, the next logical step may be for those individuals to seek to "game" the system. The current issues that have emerged around tax avoidance may be just one example of this.

While it’s interesting is to see how the word "responsibility" is permeating current policy thinking, how it is interpreted in practice will be the key question. Indeed, whether the Commission’s recommendations will be endorsed is another matter altogether. The role of the compliance community within this debate is therefore key. And with that in mind, what’s your view? Is accountability enough? And, if not, how do we move to a system in which business leaders take responsibility and banks therefore act in a responsible manner?


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