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'.
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.”
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.