Who says a good corporate reputation is an intangible asset? Well, just ask the banks.
There’s certainly nothing intangible about the corporate reputation lessons – and more – the banks are receiving following a report by the UK Parliamentary Commission on Banking Standards published today.
Set up after the Libor scandal, the Commission is not pulling its punches in showing the banking community what happens when a sector loses sight of ethical practices and effectively goes into the red with its corporate reputation credit balance.
According to The Independent, the report calls for:
- A new criminal offence to be enshrined in law
- Penalties for traders and branch staff who mis-sell financial products
- Sharp increases in fines for banks and bankers
- Bankers being forced to prove they did not break rules versus regulators building cases against them
- Loss of bonuses if risks are not highlighted to successors
Quoted in the Independent’s news story, Andrew Tyrie, the Conservative MP who chaired the cross-party committee, said: “Recent scandals, not least the fixing of the Libor rate that prompted Parliament to establish this commission, have exposed shocking and widespread malpractice.
“The health and reputation of the banking industry itself is at stake. Many junior staff who may have done nothing wrong have been impugned by the actions of their seniors. This has to end.”
If today’s report isn’t a corporate reputation dressing down and wake-up call to banking, I don’t know what is.
The recent BBC programme, Bankers, which charted the origins of the banking crisis showed how banking in the 1980s brought new pressure for profits and shareholder returns. So much so, the pressure to sell financial products to customers – otherwise known as “wallets” – overrode the actual value of those products. Banks and banking moved from the traditional “relationship banking” to a “transactional” approach. Ultimately, duty of care to the customer was eroded and – eventually – any duty of care to the society in which banks operate; hence the 2008 bank bail-outs, PPI mis-selling and the stripping of honours from senior banking executives.
And this failure to be mindful of corporate reputation could now have serious consequences – i.e. incarceration – for bankers if the Parliamentary Commission’s recommendations result in a new criminal offence of “reckless misconduct in the management of a bank”.
Then, when you’re wearing striped pyjamas, try to claim that good corporate reputation is intangible.
