Mike Smith
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28 October, 2013

London’s City Values Forum launches new initiatives to embed integrity in financial services

No one can accuse the City of London of ducking the need to create a whole new culture in financial services following the crash of 2008 and scandals that have rocked the banking world. New initiatives aimed at embedding integrity in banking were launched at the Mansion House in the City of London on 15 October. They have grown out of the City Values Forum founded in 2011 and supported by successive Lord Mayors of London.

Sir Richard Lambert, former Director General of the Confederation of British Industry and former editor of the Financial Times, will chair a new independent professional body on banking standards. The new body, yet to be named, follows a submission last year from the Lord Mayor of London to the parliamentary commission on banking standards, chaired by Andrew Tyrie MP, calling for its formation. The Tyrie commission said that the onus should not lie with the banks themselves.

‘Values have to be lived and breathed by everyone,’ Sir Richard told the recent forum, on the theme of ‘Embedding Integrity—Building Trust’, held in the Mansion House, the Lord Mayor of London’s headquarters. The new body will aim to ‘lay the foundations for a broadly-based trust in banks and financial services,’ Sir Richard said. He emphasised that ‘setting up a body does not guarantee values’ and there was a need to ‘manage expectations’, but the new body would ‘provide a canopy under which best practice can flourish’, including benchmarking the performance of individual banks. Sir Richard said he preferred to think that the new body would provide ‘leverage rather than teeth’. A key word for him was also ‘transparency’.

The forum launched four new initiatives: a Governing Values guide for boards of financial services companies, produced in partnership with Tomorrow’s Company think-tank; a degree-level City Foundation Course, Leading with Integrity, for new managers developed by Cass Business School and the Institute of Leadership and Management (ILM); a recruitment, appraisal and development best practice guide called Performance with Integrity, linked to ethics and behaviour, developed in conjunction with the City HR Association, and The City Obligation, a personal pledge to uphold values.

Speakers throughout the day emphasised the importance of the ‘tone at the top’ of organizations. ‘What is critical is how leaders’ values are embedded,’ Sir Richard said. The old rule of assessing credit risk had been ignored, leading to the financial crash and the credit crunch. Banks now need to ‘focus on earning the trust of customers and employees.’

As Oonagh Harpur, senior advisor on reputation and governance to Tomorrow’s Company, put it: ‘The chairmen who sleep well at night have a line of sight right from the boardroom to the front line.’ There was no excuse, she said, for CEOs not to imbibe values of integrity. Tony Manwaring, CEO of Tomorrow’s Company, believed that heads of big banks were no longer playing catch-up with this new agenda ‘but are leading it’. ‘The sense of what “good” looks like is palpable and exciting,’ he said. Values mattered because of reputational risk, regulatory thrust, business performance and society’s perception. Andrea Eccles, Chief Executive of the City HR Association, emphasised the critical role that HR managers play in ‘cascading’ values down through organisations. ‘Culture is values brought to life,’ she said.

So would Sir Richard, like Moses, see the Promised Land? ‘He may have seen it, if not got in,’ he commented. The aim should be to ‘help make bad memories of the past fade away.’

Opening the conference, the Lord Mayor of London, Alderman Roger Gifford, flagged the earlier launch of the City Foundation Course, which would help ‘young professionals to have a moral compass’. He hoped that the City would continue to be a ‘safe haven’ in the global market place, known for its stability and probity. This is what attracted the Chinese to invest in UK infrastructure projects, he claimed, ‘thanks to a cadre of professionals’ in the City. The new City Foundation Course would add ‘lustre to our reputation for trying to get it right’—the so-called soft power spoken of by economists. He saw the City doing ‘what it says on the tin because it serves the right values and the right culture’.

Sir Win Bischoff, Chairman of Lloyds Banking Group, also emphasised that the tone at the top is particularly important, including ‘a zero tolerance approach to inappropriate conduct’. The mis-selling of PPI had been ‘one example of how banks had lost their core values leading up to the financial crisis.’ Tackling this is expected to cost UK banks over £18 billion, of which nearly half is 'attributable to Lloyds', he admitted.

The City Foundation Course is a new qualification for frontline managers in the City of London, explained John Castledine, a director of ILM. Its two mandatory units, involving four days of face-to-face training, include ‘Becoming an Effective Leader’ and ‘Leading with Integrity’. The qualification is ‘based on enhancing values awareness,’ he said.

Professor Andre Spicer of Cass Business School said that as well as the ‘tone at the top’ there is also a need for ‘guidance from the grassroots’. The new qualification would counter a ‘rewards-orientated culture’ in financial services which often lacked human ‘soft skills’ and where there was an attitude that ‘my bonus is what I’m worth’.

To this end, the conference also saw the launch of a new short City Obligation aimed at ‘giving contemporary relevance’ to the old notion of ‘My word is my bond’. It reads: ‘I will always treat others as I would wish to be treated with honesty and integrity in the spirit of the traditional City principle that “My word is my bond”.’ Presenting it, Patrick McHugh of the City Values Forum said that ‘in our everyday lives people expect honesty—trust, loyalty and honesty—what economists call externalities.’

So what difference will all this make? The bonus culture and excessive hours in investment banking were not mentioned. Hosting the event, Richard Sermon, Chairman of the City Values Forum, said there was ‘no silver bullet’ to address all the issues. ‘If we are to reinforce the international competitiveness of the City of London and its longstanding reputation for fair dealing we must act decisively to raise the bar,’ he says. ‘This is a matter for board leadership and governance not regulation. Integrity, trust and values have moved irrevocably from the “nice to do box” to the “must do box”.’;

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