Dianne Hayter on why a Code of Conduct is essential for our financial services sector
As Ed Miliband said last week, hope of rebuilding our economy requires real change for Britain’s banks. Such a vital shift to long-termism and shared responsibility requires us to challenge how we’ve been doing things for decades. From the LIBOR scandal and mis-selling of insurance to the story emerging of money laundering at HSBC, the culture of financial services needs to change.
As the Financial Services Bill continues its passage through the Lords, there is a prime opportunity to raise questions about this culture. The behavioural traits of those working in the sector have simply not been sufficient in regard to professionalism, integrity and competence. We must move from the Casino banking we currently have, to the Stewardship banking we need.
Our amendments seek to raise standards of professionalism across the industry, partly by adding this in the definition of “integrity”, partly by introducing a Code of Conduct, and partly by mandating a training and competence regime. It is really only what other professions expect – training, a Code, qualification, continuing professional development and proof of competence.
Part of the reason we trust lawyers and doctors, architects and surveyors, is that they meet these requirements – with proof of competence. That is why we trust them with our wills, our conveyancing, our divorces and our lives. Those professions have Codes of Conduct which lay down what is expected of people. It also enables us to know what is expected of them.
We know that the higher a practitioner’s commitment to professional standards, the lower the likelihood of consumer harm – and at the same time, the higher is consumer trust and confidence.
Stewardship banking relies on the idea that banking is a trusted profession, not a fly-by-night activity. So anyone who breaks the rules should be struck off. People shouldn't be allowed to work in banking again if they mis-sell a product. Until then, we shouldn’t expect public confidence in the sector to return any time soon.
To restore trust and confidence, we must also ‘up-skill’ the workforce, both in technical standards and ethics. Only then will we show that we're serious about giving banking the status of teaching, medicine and law.
We cannot simply hope for change. We must work for it as well. Our amendments seek to force the regulator to examine the extent to which firms have demonstrated their commitment to such ethical standards – making them a core part of the Financial Conduct Authority (FCA) remit.
Left to themselves, too many firms simply do not pass muster. The FCA needs therefore to have the power to send clear signals to those it regulates about the behaviours and professionalism it expects.
Baroness Dianne Hayter speaks for Labour on consumer affairs issues in the Lords