Barclays response to the Banking Standards Review Consultation Paper
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Barclays response to the Banking Standards Review Consultation Paper March 2014
Banking Standards Review – Barclays Response
Barclays welcomes this opportunity to respond to the Banking Standards Review Consultation
Paper. Barclays made the case for a professional body in its initial submission to the
Parliamentary Commission on Banking Standards in 2012 and, with some of the UK’s other
largest banks and building societies, was instrumental in asking Sir Richard Lambert to develop
proposals for the creation of a new professional body for banking.
The restoration of trust in banking and financial services, for all stakeholders, is crucial in
enabling banks to achieve their societal obligations in supporting economic growth.
Barclays is, therefore, supportive of the themes set out in this consultation paper and a
summary of key points is below. A more detailed, question by question, response is at Annex
A.
Summary
The new body should focus on:
Defining good behaviour from the customers’ perspective in its widest sense, including
shareholders and wider society.
The definition of the minimum standards relating to the professional disciplines and
behaviours that constitutes the profession of banking.
Laying down a standard framework for the key organisational processes that enable the
above standards to be met e.g., technical frameworks, leadership development, cultural
measurement etc.
Accrediting organisations that meet or exceed the established standards and frameworks
with a kite-mark and associated commentary.
Publishing an annual review of the progress of participating members, which is made
available externally and also reviewed with PLC boards by exception.
Ensuring the body is independent in nature, but comprising some bank representatives and
also making use of senior secondments from banks to provide the technical expertise
required to assist the new body in performing its functions.
Assisting the industry in reshaping the multiple organisations that provide qualifications.
This should be in conjunction with universities or other respected institutions that can
ensure appropriate academic underpinning and credibility. Additionally, this will also help
to address the attractiveness of professional qualifications for individuals.
2Annex A
Objective
1. Do you agree with the objective to establish a new independent organisation with the
aim of defining and raising standards of conduct and competence in banking?
Barclays is fully supportive of this objective. We welcome the establishment of a new
independent organisation with the aims as stated and look forward to engaging
constructively with it as well as assisting with its formation in any way appropriate.
Collective Action
2. Do you agree that there is a case for a collective approach calling for the participation
of all banks doing business in the UK?
Yes. The banking industry has much work to do to restore trust with customers,
shareholders, and the general public. Banks have undergone significant reform since
the beginning of the financial crisis, but there remains more work to do and collective
action is required.
Role and Scope of the New Organisation
3. Do you agree with the proposed role of the new organisation to set standards of
behaviour and competence for banks and building societies, and to define metrics
against which they could benchmark?
Yes. In setting standards of conduct and competence in banking, we would suggest
that there is a role for the body to focus on the definition of the minimum standards
relating to the behaviour and disciplines that constitute the profession. The new
organisation should then look to lay down a standard framework for the key
organisational processes that would enable the defined standards to be met.
Furthermore, we would suggest that the body should accredit organisations that meet
or exceed the standards and frameworks and support the concept of a recognised
‘kite-mark’ and associated commentary.
4. Do you agree with the proposed scope of the new organisation to include all British
banks and building societies, and foreign banks doing business in the UK?
Yes. If the organisation is to be truly effective, the standards it sets must cover the
broadest possible reach of banking activity undertaken in the UK. For this reason, the
scope should be broad.
Credibility
5. Do these proposals go far enough to ensure the body has credibility?
3Barclays believes that the proposals mark an important step towards establishing a
body with the influence and credibility to achieve its objectives. However, it should be
noted that the absence of sanctioning powers (either intrinsic or extrinsic) may limit
the body’s power and ultimate ability to achieve its objectives.
We would suggest that, if the body is not to be granted specific sanctioning powers of
its own, at least initially, it might achieve the necessary influence through some kind of
arrangement with the Financial Conduct Authority. One option might be to adopt a
similar approach to the Lending Standards Board, which is a self-regulatory
organisation which has a memorandum of understanding with the FCA.
Finally, we would suggest that the body should have, not only independent board
members, but also take advantage of seconding senior employees from member
banks, in order to provide technical expertise. Secondees should, of course, have no
role in engaging or monitoring their ‘home’ bank.
Membership
6. Do you agree that the new body should initially work with banks and building societies
rather than individuals?
What are the pros and cons of aspiring to build individual membership over time?
We agree that, for practical reasons, the body is initially justified in working with banks
and building societies rather than individuals. However, ultimately it should seek to be
an individual membership organisation.
Further detail is provided in our answer to Question 18.
Ethics
7. In the section titled ‘Ethics’, a case is made for a more pro-active approach to
managing ethical issues. Do you agree with this, and if so how should it be done?
We agree there is a compelling case for a more pro-active approach to managing
ethical issues – the link between leadership, culture and performance is key to
understanding and driving change in any organisation.
Barclays has, in recent years, made significant changes to address the issue of ethics,
including:
Introducing a clear purpose and values with all 140,000 colleagues undergoing
training into the Barclays Values.
Developing a new Code of Conduct – the Barclays Way – which all colleagues are
required to read, understand and attest that they understand their obligations and
will follow the requirements of the Code.
Introducing a Leadership Academy for the c. 2,000 most senior leaders and
managers in the organisation to drive a change in the culture of the organisation.
4Given the importance of setting the culture to individual firms, we expect that banks
will want to drive, shape and manage aspects of culture and behaviour with a
standards body reviewing the individual processes of members, rather than prescribing
the manner in which they should operate.
Professional Standards
8. Do you agree with the proposal to build on best practice as set out in the regulators’
guiding principles?
Yes. The regulators’ guiding principles should form the foundation of any standards.
Best practice, almost by definition, must build on this. It is essential that the role of this
body dovetails with the new Senior Persons and Certification Regimes.
9. What would be the best way of assessing the implementation of a bank’s code of
conduct?
The body should focus on auditing a firms’ approach and mechanisms and require an
attestation as to implementation and compliance rather than assessment of
employees’ awareness, which could be costly given the global reach of the proposed
scope of the organisation. Assessing a banks’ implementation of standards might
include reviewing how standards have been built into all elements of the employment
cycle e.g., recruitment and selection, training and development, performance
management processes etc.
10. Do you agree with the agenda outlined in the ‘standards of competence’ section?
There has been much debate about whether banking is a profession and Barclays’ view
is that one of the aspirational goals of this body should be to re-establish banking as a
profession. Ensuring standards of competence is, therefore, important although
banking is different to other professions where there is a standard qualification
requirement before individuals specialise (such as with law or medicine).
We see, therefore, a major opportunity for this new body to focus on the key disciplines
that constitute the profession of banking.
We support the proposal that the body should provide a canopy under which other
professional bodies would continue to operate and grow and to provide accreditation
of training providers and training that match the new body’s criteria. Accreditation
must be sufficiently flexible so as to fit with a bank’s own training and development
approaches.
There is a plethora of different training providers and when in house schemes are also
included, it is likely that there are many thousand training courses in operation across
the banking industry. It may, therefore, be an overly onerous and impossible task to
expect the new body to assess the quality of all training. The success of the new body
will lie in setting clear standards to which training providers should align their content.
11. Would you support the proposed relationship with the existing professional bodies?
5We support the proposal, but careful consideration needs to be given to the
practicalities of the new body accrediting all third party and in-house training, which
might become overly cumbersome and costly. The same outcome may be achievable
through the setting of clear standards.
There is certainly a role for the body in coordinating and reforming the multiple
organisations currently providing industry-recognised qualifications. Additionally, it
could work with a small number of universities to ensure a robust academic
underpinning to relevant qualifications, addressing any issues in the attractiveness and
credibility of the professional qualifications.
12. Is the proposal for assessing in-house training sensible and practical? Could the new
organisation play a helpful role in the certification process?
As mentioned above, there are real practical constraints as to why assessing in-house
training may not be desirable.
Greater clarity is required from the regulators as to the way in which the certification
regime will work, before it is possible to ascertain what role the new body might
perform.
Benchmarking
13. Do you think a benchmarking exercise, to help banks identify areas for improvement,
would be of value?
Providing a cultural viewpoint through metrics is one of the most challenging aspects
of the proposals. Service is often seen as an effective barometer of cultural
development. However, this is not the case as there are many other factors that
impact service in addition to the culture of an organisation.
Rather than focus on measuring specific metrics, the new body’s resources may be
better spent on setting down a minimum standard for the measurement of culture.
14. Are the groups of metrics outlined in the section titled ‘Benchmarking’ the correct ones?
Would you propose others?
The broad headings are, in some ways, skewed towards retail which may provide an
incomplete picture, particularly in respect of universal banks.
Some of the identified metrics are, in addition, already regularly reported by the
regulators e.g., customer complaints levels and it seems inefficient and potentially
confusing to duplicate the publication of information that is already published
elsewhere. The identified metrics also focus, perhaps too heavily, on the negative
experience of banks and it would be helpful to include advocacy or net promoter type
scores in the toolkit to provide a more rounded picture which might, more effectively,
deliver a race to the top rather than a race from the bottom.
615. Would it make sense for banks to adopt a set of standard questions to add to their
existing staff surveys?
Whilst there could be value in a common set of themes or issues (or indeed minimum
standards) being suggested for questioning by the body, the differences in structure,
manner, values and other variables between members could make a set of centrally
prescribed questions problematic. We suggest that member banks are left to tailor the
specific questions to their particular circumstances.
16. Is self-reporting appropriate? Might other methods deliver better results?
Barclays believes that self-reporting is an effective and established mechanism for the
publication of similar data.
Discipline
17. Are there non-bureaucratic alternatives to the approach outlined in the section titled
‘discipline’ that might work better? Is there a role for kite-marking?
Barclays is supportive of the proposals set out in the consultation paper as regards to
discipline. The proposal to allow for an annual discussion with independent directors
should be on a by-exception basis, rather than the norm, given the already
considerable demands on directors’ time.
Consideration should also be given to putting in place a mechanism in the event that
participating members wish to appeal the body’s findings. This should be light touch
and the body should have final say, however, it would ensure that in instances where
errors are made because, for example, inaccurate or incomplete information is made
available to the body in error or as an oversight, a bank is able to seek a correction prior
to the publication of any findings.
Banking as a Profession
18. Do you agree with the proposition that the new body should aim to become, in time, a
membership organisation for bankers to join?
We support the proposition. A newly established and independent professional body,
with an enhanced foundation of training and accreditation, plus a robust system for
detection and correction of misdemeanours, would ensure that a high level of
professional standards would be required across the industry.
We see a benefit for customers as they are able to confirm that a person was a member
of the register, as with other professions, and would have recourse to make a
complaint to the governing body in the event that they are concerned with the conduct
of that person.
We hope that this body could evolve into a centre for excellence, best practice and the
further development of an informal expectation of conduct and behaviours to
complement the new Code of Conduct.
7Thought Leadership
19. Should the new organisation aspire to a role as a thought leader in banking, sharing
best practice and helping to propose solutions to challenges that arise in the future?
In recommending the creation of a professional body for the industry, the
Parliamentary Commission on Banking Standards made clear that a new body should
be entirely separate from any trade associations representing the industry’s interests
and views. With this in mind, in order to preserve that very clear distinction, we believe
that the new body should have no role in thought leadership or campaigning other
than focussing more narrowly on driving ever higher standards in the industry.
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