A long career in banking has brought me into contact with a remarkable and broad range of people around the world. Most of this contact and interaction was uplifting and positive, but some quite the opposite.
Ours is an industry famously high on IQ but low on EQ – emotional intelligence. Bullying, prejudice, discrimination and insensitive behaviour have marked out parts of our highly competitive industry.
I recall bad behaviour earlier in my career to which I was subjected or which I witnessed, which today would spark an immediate call to HR. However, recent events shake confidence in the overall business and political climate here in the UK.
Headlines in the past weeks should make us reflect further on exactly what does or does not constitute acceptable behaviour in the workplace and, more generally, at the top of the nation’s leadership.
A scan of media headlines suggests some persistent behavioural problems. Nevertheless, substantial progress has been made in financial services, helped by pressure from the regulators requiring senior managers to set a ‘tone from the top’.
However, the problem is not confined to financial services, as is evident from the troubling behaviour at the very top of our political leadership.
Blurred lines
Much of the debate tiptoes around blurred lines between what is legal or illegal, and what is just bad or unacceptable practice. Financial services, under the guidance of the regulators, have largely achieved a consensus, but it is clear that the lines remain distinctly fuzzy still across wider areas of the country’s upper echelons.
It is notable that politicians judged guilty of bad behaviour rejected the judgment and sought to undermine the mechanisms employed to arrive at those judgments. What should society deduce from this?
In the banking industry, the regulator has lifted the problem of leadership behaviour out of the realms of legal ambiguity and imposed an oversight framework that sets a much lower threshold of tolerance compared to legal processes.
Society needs clear and enforceable standards of leadership, not just for bankers
Moreover, the regulatory findings are harder to argue with, leaving little room to reject their findings. Broadly this is a good thing. The ‘tone from the top’ requirement ensures that leaders are expected to lead by example and that example is open to scrutiny.
Troubling for highly regulated bankers is the resulting inconsistent mess elsewhere in society. A former UK prime minister condemned for bad behaviour in a damning report by his peers dismisses the charges as the output of a ‘kangaroo court’. Likewise, a former deputy prime minister (and former justice minister), when found guilty of bullying in the workplace, angrily ripostes that the inquiry into his conduct set the bar far too low on what was not acceptable.
Society needs clear and enforceable standards of leadership, not just for bankers.
Broader mechanism
Of course, we as bankers accept the jurisdiction of the regulators as part of our licence to operate and as part of rebuilding our battered reputations. It is clear that the legal process can be a slow, technically narrow and inefficient way of dealing with problems, and many of the behaviours that contributed to the financial crisis and other scandals in finance fell short of legally defined crimes.
That is one of the reasons why we ended up with the regulatory conduct regime. Do we now need a broader mechanism to enforce accountability across senior areas of corporate and political life?
Clouding the debate on behaviour is the persistent and ever-present miasma of fake news, and strident social media, sometimes malicious in intent. Accusations of bad behaviour might be ill-founded. Headline risk and reputational damage are major concerns for leaders and for organisations that can have dramatic consequences.
While respecting the right to be innocent until found guilty, the legal process is a poor guide to the shades of grey typical of some individual behaviours, which nevertheless drive and affect reputations. Ask anyone at Credit Suisse, Odey Asset Management or the CBI.
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The private sector and its regulatory mechanisms have shown the way, although not always perfectly. However, we need to extend this ‘tone from the top’ requirement beyond the confines of financial services supervision.
Moreover, society should expect to be able to get to a point where accusations of ‘kangaroo court’ or setting the bar too low are viewed as unacceptable responses to the legitimate findings of serious inquiries.
Accountability is critical, and society should expect this from all sections of the community. It is time to treat all leadership equally and set proper standards for all.
Tim Skeet has spent much of his 40-year career specialising in bank funding in the capital markets, including working on developments in these instruments from the earliest times. The views expressed here are his own.
