Call for bankers to swear an oath to raise standards in banking
A new report – published by the think tank ResPublica and co-authored by Professor David Llewellyn from Loughborough University – has called for the immediate introduction of an oath for bankers, similar to the Hippocratic Oath, in order to raise accountability and standards in banking.
The authors of the report believe that, despite nearly five years of financial reform, the job of banking reform can best be described as half complete. They suggest this is because policy makers have pursued the wrong type of reform, focussing 'wrongly' on regulatory or prudential issues, and ignoring the crucial root cause of the banking crisis: an inherent lack of virtue amongst UK banking institutions.
In order to instil virtue and responsibility, the report states, bankers must have more personal responsibility, which the authors maintain 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.
The ResPublica report, entitled ‘Virtuous Banking: Placing ethos and purpose at the heart of banking’, was launched at the Financial Times to senior bankers, regulators and politicians. Sir Richard Lambert, former editor of the FT and current Chair of the newly created Banking Standards Review Council, gave the keynote speech. He said the report was "full of brilliant ideas", "required reading for policy-makers" and included recommendations that his Council will wish to take forward in the urgent mission of increasing standards in banking.
One of three authors of the report, Professor Llewellyn – and his colleagues at Loughborough University's School of Business and Economics – has made a significant contribution to improving the standards in UK banking. Currently in his second term as Chairman of the Board of the Banking Stakeholder Group at the European Banking Authority (EBA), David has published widely in the area of financial regulation, acted as a consultant to regulatory agencies in several countries and was a Public Interest Director of the Personal Investment Authority – a predecessor of the Financial Services Authority.
Professor Llewellyn said: “Over recent years and months banking has been shocked by a series of much-publicised scandals across a wide range of areas. This has substantially eroded the image of banking and the public’s trust and confidence in the industry.
“We all know the costs involved when people are misled into buying inappropriate financial products such as Payment Protection Insurance (PPI) contracts, and banks have been required to pay massive fines and compensation for this. But just as important are the costs to consumers when they do not buy good products because of their lack of trust and confidence.
“Our central theme in the ResPublica report is that what is needed is no less than a fundamental change in the culture of banking. Amongst many specific recommendations we argue the case for bankers being required to take something akin to the medical profession’s Hippocratic Oath.”
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.”
Other recommendations from the report include:
− Reclassification of small businesses as ‘consumers’ to ensure banks treat struggling firms fairly
− Introduction of tougher fiduciary duties for bank shareholders to ensure our banks are held to account
− Localisation of the British Business Bank through LEPs to promote local banking.
Notes for editors
Press release reference number: July News
1. ‘Virtuous Banking: Placing ethos and purpose at the heart of finance’ is available for free download from www.respublica.org.uk
2. The ResPublica Trust (which operates under the trading name ResPublica) is an independent, non-partisan think tank. It focuses on developing practical solutions to enduring socio-economic and cultural problems in the UK. Its practical recommendations for policy implementation seek to strengthen the links between individuals, institutions and communities that create both human and social capital.
3. The text for ResPublica’s proposed Bankers’ Oath is as follows:
“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.”
4. Loughborough is one of the country’s leading universities, with an international reputation for research that matters, excellence in teaching, strong links with industry, and unrivalled achievement in sport and its underpinning academic disciplines.
It was awarded the coveted Sunday Times University of the Year title in 2008-09 and has been named Sports University of the Year 2013-14 by The Times and Sunday Times. Loughborough is consistently ranked in the top twenty of UK universities in the Times Higher Education’s ‘table of tables’ and has been voted England's Best Student Experience for six years running in the Times Higher Education league. In recognition of its contribution to the sector, Loughborough has been awarded seven Queen's Anniversary Prizes.
In 2015 the University will open an additional academic campus in London’s new innovation quarter. Loughborough University in London, based on the Queen Elizabeth Olympic Park, will offer postgraduate and executive-level education, as well as research and enterprise opportunities.