ICA's response to the UK Banking Standards Review Council final report

ICA wishes to congratulate Sir Richard Lambert on the publication of the final report. The report produced by Lambert’s Review of professional standards in banking has proven to be a sensitive and careful evaluation of the role that the new Banking Standards Review Council (BSRC) might play in the ever-more complex arena of banking within the UK.
The consultative and co-operative approach adopted for the Review, with which ICA engaged, has helped to reach a number of positive conclusions where the banking sector may realise benefits.

  • Organisations meeting the challenge to raise the level of skills, competencies and qualifications for all staff will prove more resilient going forward.
  • Challenging professional bodies to ensure that they develop and build the most relevant curricula and rigorous qualifications intended to assess and measure the capabilities of bank staff will raise standards across the whole sector.
  • Working in co-operation, under the comprehensive coverage of the BSRC, with regulators, banks, building societies and professional bodies, places behaviour and ethics as the key focus for long-term success, which will ensure that the sector is more than compliant and meets the spirit of regulation.
  • Using existing relationships developed by organisations within the banking sector will enable the BSRC to achieve its aim to restore public trust and confidence in the integrity of the banking sector as a whole, its organisations and their individual staff members.

It is, nevertheless, necessary to point out that there are limits and constraints on the potential of the BSRC to succeed, which is of concern for ICA. There is no guarantee that all the banks and building societies operating in the UK will sign up to the organisation’s agenda for continuous improvement. The reporting requirements for culture, competence and customer outcomes, could prove onerous and leave some organisation’s feeling exposed. Many organisations in the banking sector are, however, already taking an approach that tempers their short-term commercial interests with ideas that support longevity, sustainability, integrity and ethics.

The potential for increasing short-term reputational risks might not prove alluring unless the groundwork for this venture can demonstrate benefits. Banks and building societies will want to be certain that the acceptance of short-term risk is outweighed by long-term benefits. It is likely that retail banks and building societies will continue to concede that there is an advantage to be gained, subscribing to the BSRC’s standards and supporting its ambitions. There remains some doubt that the Council’s aspirations will prove attractive to wholesale and investment banking.

It would be unfortunate if some measure of coercion appears necessary to achieve the BSRC’s aspirations. The Council is a voluntary organisation without statutory powers, which could mean that it struggles to take its agenda forward without the help and influence of government. The worst outcome would be delay reported as a result of recalcitrance, in-fighting and playing for position within the sector. It is the view of ICA that, potentially, the best outcome that could happen would be for the BSRC to achieve its ambitions in co-operation with the combined efforts of all the banks, building societies and professional bodies that operate in the UK.