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Anthony Hilton: The UK's banking culture is still flawed and untrustworthy
30 April 2019

used to think the Banking Standards Board was an exercise in PR, designed to put some lipstick on a pig, but not actually making much difference to the world of banking.

But since it was set up in 2015 the BSB has surprised. Though it is a collaborative effort, financed by practitioners and self policing, its recent report on the industry does say what needs to be done, where the industry is doing well, and where it could do better.

It is trying to make the industry trustworthy again, which means banking has to focus on culture and deliver the right outcomes for the public. This doesn’t just mean a few people trying harder when they don’t have anything else to do. Rather that they should be focused on doing the right thing, and doing it all the time, in a common purpose shared by all. It is the responsibility of every employee, started and carried through by staff at all levels in the business.

This year’s report, which came out last month, shows how hard this will be. Dame Colette Bowe, the chairman, and Alison Cottrell, the chief executive, may wrap their words in velvet gloves, but there is no doubt that after two years of reasonable progress, this last year has been a disappointment.

Each year the board conducts a survey of employees. This year it had more than 70,000 participants, which is huge and easily twice the numbers of the first survey three years ago.

The good news, according to Bowe, was that senior leaders in banks are perceived by their colleagues to be taking more responsibility and to be more credible. This is no doubt because of the regulatory efforts to focus on responsibility, and the FCA’s insistence on implementing the senior manager’s regime which put leaders personally in the frame for wrongdoing. But it is still good that the results are being noticed by employees.

Now for the bad news. The counterpart of encouraging people to speak up is a willingness to listen and act at all levels of business. The survey shows a much less positive picture here. Employees are sometimes fearful of the consequences if they were to intervene when something was wrong. Or, even if they personally would not be targeted, they were convinced that speaking up would be futile.

Nor was it just a handful of people — almost one in four had concerns.

Of these a third kept quiet, but 63% had raised the issue with a manager. However, 40% of these were not taken seriously and 19% got no feedback so were unsure what had happened.

Employees were more likely to raise something which was likely to affect the business, than they were about bullying, or discrimination. But if the employees’ concerns are shown in a scatter diagram, in which the most spoken words are those which appear most prominently, behaviour, bullying and fear are their issues.

The same thing happened with employees feeling stressed. A quarter of all employees of the survey said that working in the firm had a negative impact on their health and wellbeing. This apparently is more or less the same as in the two previous years. One would have thought that this is a pretty high percentage.

Again the scatter diagram reveals workload, time, long hours, and expectation as the words most often used. Furthermore, 40% felt under excessive pressure at work, even if it was not causing them health concerns.

More than half the employees also felt that the main reason they could not serve their customers as well as they might, was because of the complex internal systems and processes caused by the bank itself.

The banks still do not always help themselves either. Lloyds is making a huge mess of the Reading fraud case; Barclays’ chief executive Jes Staley got caught trying to uncover a whistleblower; RBS has still not really come clean on how it managed its business recovery division. There are many companies who have been destroyed by interest rate swaps which should never have been offered to them.

So if employees are determined to speak up about wrongdoing then the banks should embrace them.

If employees have to exercise judgment dealing with customers, they ought to be in an organisation which treats them fairly. Culture depends on outcomes, not inputs. The banks still have a long way to go.