Confessions of a compliance officer: Do bankers really believe in the new culture?
29 Mar 2019

The issue of culture and conduct is a big deal in the banking sector, the authorities say. Basically, following big scandals and ensuing damages caused, regulators want bankers to change the way they behave, and make them more accountable for their actions.

Banks have admitted the need for change and have made efforts and investments to address the issue of culture. But are they sincere — do they really believe in it — or is it just a matter of ticking-boxes to keep the watchdogs at bay? A London-based compliance officer — who does not wish to disclose his name or details — muses over colleagues’ attitudes towards culture. This is what he has to say:

Following various misconduct scandals and fines since the financial crisis, regulators around the world demanded that the banking industry should change its culture from the “profit-maximisation only” approach to one which focuses much more on the needs and interests of the customers.

As a result, most banks have a strap line or slogan, which emphasises their new philosophy such as “Putting the Customer Back into the Heart of Banking”, “Putting the Customer First”, “The Go To Bank”, “By Your Side” and other such phrases.

However, in my conversations with compliance colleagues, there appears to be some doubt as to whether the banking industry and those who work in it really believe what their employers are telling the world about banks truly changing their conduct.

I would like to relay three conversations about culture that I have had with colleagues from various banks in London.

What colleagues told me

Firstly, I was discussing a recent court case with a colleague involving the bank he worked at.

I explained the nature of the dispute that led to the legal suit.

My colleague said he was not aware of it. I suggested that the arguments put forward by the bank appeared to directly contradict its public statements about its philosophy and culture.

For example, it claims to ‘put the customer first,’ but in fact it was clearly not doing so!

So anyway, my colleague responded “If you are stupid enough to be one of the few staff who believe what the bank says about ‘improving’ culture, then you are going to be disappointed.”

Secondly, I was having a conversation about culture with a Head of Compliance of a foreign bank operating in London.

He intimated that the UK banking regulator, the Financial Conduct Authority, was very keen on culture and wanted each bank to develop and articulate its own culture.

However, he was concerned about how to explain the bank’s culture to the regulator and how he could measure whether the new culture was properly embedded across all the operations of the London unit.

I made some sympathetic noises.

A couple of weeks later, I was reading the annual report of his bank, which contained pages and pages about the culture of the bank.

A few months later, I bumped into my colleague at an industry event and reminded him of our earlier conversation.

I advised him that his bank’s annual report contained lots of material about its culture and how they measure it.

He responded “It’s all very well those ******!! in Head Office spouting on about culture, but they have no idea about what it’s like at the coal face every day.”

I concluded, therefore, he did not believe what his bank publically stated about its culture.

For real or for show?

Finally, whenever I have conversations with colleagues about the culture of the banks that they work in, I ask the following question: “This new ‘improved culture’ that your bank has adopted and implemented, is it because your senior managers have read whatever Good Book they believe in and they have decided to treat customers properly because it is the right and ethical thing to do, or do they espouse the new culture because they fear huge penalties from the regulator?”

Every colleague chose the latter option!

Against this anecdotal evidence of staff cynicism about the new culture in banks, is it any wonder that in a recent survey of UK customers on retail banks, just 40% said they trusted banks?

Globally, the financial services sector is the least trusted business sector with just 54% of respondents trusting the industry.

Industry leaders should be particularly concerned with this result as the respondents were not the general public, but were limited to those who had a university degree and who were in the top quartile in income in their age cohort and who were consumers of various news services.

Read more:

Confessions of a compliance officer: The risk-based approach goes wrong

Confessions of a compliance officer: A mighty banker crashes to earth

British MPs call for investigation into ‘untouchable’ senior bankers

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