Friday, 12 June 2015

Is mis-selling and an 'age of irresponsibility' over ? Selling Responsibly

One who thinks that money can do everything is likely to do anything for money
                                                                  – Hasidic Saying

View from Waterloo Bridge of the the old city financial district
( note the walkie talkie ( left of centre) and cheese grater (left)
 and docklands Canary Wharf, HSBC tower ( right hand side horizon) 
The banking and financial services industries are no longer solely concentrated within  the old city of London but have spilt over to the docklands.

 Yet the good and the great still return to the square mile for their Mansion House summer banquet each year, to enjoy companionship and to hear the chancellor of the exchequer and the Governor of the Bank of England address them .

“The age of irresponsibility is over” heralded the Governor of the Bank of England Mark Carney at the Mansion House banquet.

Like every business, Bankers can claim and do claim, that there business is “different” and special. 

In some ways this is quite true but not in all ways -  and especially not in the conduct of their practitioners in their selling ethics.

There are certain business parameters that remain the same for the banking and financial services world and the 'real economy'.

 For example, an e-cigarette shop,  a supermarket and global corporation may be very different businesses yet they can all be described by an accountant in a Cash flow statement, Profit and Loss Account and a balance sheet.

Responsibility is another.

The nautical noun Captain is often assumed by the CEOs of leaders who attend such 'bashes'. 

 These captains of industry  take command of their various enterprises

So maybe this particular definition from a past nautical leader on 'responsibility' is pertinent

Responsibility is a unique concept you may share it with others but your portion is not diminished. You may disclaim it but you cannot divest yourself of it. Even if you do not recognise it or admit its presence you cannot escape it. If responsibility is rightfully yours, no evasion, or ignorance or passing the blame can shift the burden to somebody else. 

-Admiral Rickover US Nuclear Submarine Fleet Commander

"No evasion, or ignorance or passing of blame can shift the burden to somebody else" and yet few 'captains' heads have rolled in the banks and financial institutions. 

“Unethical behaviour went unchecked, proliferated and eventually became the norm,” Mr Carney told the audience of City grandees and senior executives. “Too many participants neither felt responsible for the system nor recognised the full impact of their actions.”

A shift from a "Principles base" regulated market to a "rules based" market will lead to more robust compliance but the burden of responsibility of the leaders in sales will be unchanged.
Huge fines and the public listing by naming and shaming may have some effect but unless the reins of responsibility are  taken up and held few reckon FEMR (Fair and Effective Markets Review ) and its revised processes will be no game changer.

The crackdown plans from the Bank’s so-called Fair and Effective Markets Review which was commissioned by the Chancellor, George Osborne, aims to restore public trust in the City. 

Mr Carney added that a "senior managers’ regime" would be extended beyond banks to cover asset managers and hedge funds, meaning that all those in charge of traders active in markets vulnerable to abuse will find themselves personally “on the hook” for promoting compliance within their organisation

The UK’s largest banks, including Barclays, HSBC and Royal Bank of Scotland, have been fined billions of pounds by regulatory authorities over the past two years for the illicit actions of some of their senior traders, who rigged Libor and foreign exchange benchmarks for personal profit.

Mr Carney had the good grace to accept that the Bank of England itself “fell short” over the past decade, pointing to its faltering provision of liquidity to lenders during the crisis, its failure to spot “gaps in the regulatory architecture” and its own “arcane governance” structure.

Tens of thousands more City workers will face an unprecedented crackdown on bad behaviour. The Bank of England has recommended extending the senior managers’ regime to all fixed income, currencies and commodities traders at banks, as well as their counterparts at inter dealer brokerages and buy-side asset managers.

Falling confidence in market resilience has meant companies have held back productive investments.

 The resulting uncertainty has meant people have hesitated to move job or home. 

These effects are not trivial and they have reduced the dynamism of our economy in the post-crisis years

No evasion, ignorance or passing the blame can shift the burden of ethical selling responsibility to somebody else whether you are in the C suite or out on the trading floor or the trading room on the phone.

As 33rd president of the USA one Harry Truman put it the "buck stops here".

"You cannot escape the responsibility of tomorrow by evading it today."

-Abraham Lincoln  16th President of the USA

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