We had a fascinating discussion about how to fix the banks at the Financial Services Club last night (Part Two next week) and the gist of what most panellists came back to, as well as the audience, is that we need to return to basics and get the culture right.
This is not an overnight change, a quick fix or an easy thing, but it is a fundamental.
The values and culture need to focus back upon doing what’s right for the customer and society, being ethical and moral, open and transparent, trusted and secure.
These are all things that banks used to be, some say, and should be again. In particular, like lawyers and doctors, banks should have a code of conduct that they adhere to and that, if broken, would result in being struck-off.
Now these are things that some feel are already there.
We do have an industry code of conduct regulated by our Chartered Institute of Bankers and Institute of Financial Services. However, these are nowhere near as formalised or respected as the Law Society or the Medical Council in the legal and healthcare services, so being struck off by the Chartered Institute of Bankers does not strike fear into our hearts.
Some would say the new Financial Conduct Authority (FCA) would strike such fear, but really? The FCA hasn't struck off Fred Goodwin because, technically, Fred has done nothing wrong.
Similarly, we have heard all about doing the right thing for customers and society and returning to the right values and culture lots over the last five years.
A great example is Bob Diamond who, you might not remember, only became CEO of Barclays after the previous CEO, John Varley, left in January 2011.
Bob gave the inaugural BBC Today Lecture in November 2011, and it was all about Barclays bank becoming good citizens.
A senior economic adviser at the White House put a question to me.
"Do you think banks can be good citizens?" he said.
I wanted to answer yes, but before I could reply he said: "If the answer is "yes", think about the fact that no-one will believe you."
I did think about that - I have thought about it quite a bit over the past three years.
I want to use this opportunity tonight to share with you my views on why the answer to that question must be "yes"; it's because the single most important thing for banks and for businesses now is to focus on helping to create jobs and economic growth; and being able to do that requires us - banks in particular - to rebuild the trust that has been decimated by events of the past three years; and that rebuilding trust requires banks to be better citizens.
I believe in this passionately.
What does being a good citizen mean Bob?
It “comes down to culture.
It's a very personal thing, but throughout my career - from my time as a teacher, to my time as a banker - I have seen just how important culture is to successful organisations.
Culture is difficult to define, I think it's even more difficult to mandate - but for me the evidence of culture is how people behave when no-one is watching.”
Eight months later, Diamond is out of a job when his bank is found to be fixing mortgage rates when no-one is watching.
Now, to be honest, Bob was not far off the mark.
Barclays got caught with their LIBOR scandal headlines when, in reality, they were the bank that were the whistle-blower on the scandal.
It was Barclays that told the Fed and Bank that banks were rigging LIBOR rates, and it was Barclays that were the first mover, co-operating with the governments and regulators to sort it out.
But then Diamond’s successor comes in, Antony Jenkins, and he also starts blathering on about values.
In a letter to all staff in Barclays staff at the start of the year, he says:
“The behaviour which made those headlines in 2012 took place in the past. But it helped underline how banking as a whole had lost its way, and had lost touch with the values on which reputation and trust were built.
“Over a period of almost 20 years, banking became too aggressive, too focused on the short-term, too disconnected from the needs of our customers and clients, and wider society. We were not immune at Barclays from these mistakes.”
But these are just more words aren’t they, some would say.
For example, all banks have values and have always had values.
For example, if you walk around HSBC’s offices, you find posters like this one:
So all banks have the words, but do they act the values?
Do they believe them?
Do they ensure they are being followed?
Obviously, it takes more than speeches, words and posters.
It takes action.
We need action.
Antony Jenkins at Barclays has taken action getting rid of Rich Ricci, the last vestige of the Bob Diamond BarCap Empire. At the same time he has closed down the banks’ tax avoidance division and their food commodities trading desk, even though it was profitable (but not ethical) and more.
Will this change culture in Barclays?
I think yes.
According to my contacts, Barclays is reforming itself back into an honest-to-goodness bank, with honest-to-goodness bankers.
Mr. Jenkins has shrunk the portfolio of 27 values down to just five: Respect, Integrity, Service, Excellence and Stewardship.
Interestingly, the five principles spell the acronym RISES.
Will Barclays rise?
I hope so.
And I hope the other banks do too, with a new moral compass pointed firmly for doing what’s right for society and for the customer.