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Banking & Finance analysis: Lara Oyesanya, vice president, legal counsel at Barclays, outlines how the new Banking Standards Review Council (BSRC) aims to rebuild public trust in the sector following recent scandals and the financial crisis.
Work to create the BSRC, a new professional body to promote high standards in banking, should get underway immediately, a new report says. The report, published by the Banking Standards Review and led by former CBI director general Richard Lambert, follows a consultation in February 2014 which outlined first thoughts about what the new organisation should look like.
Under the new council, financial institutions will be required to commit to a programme of continuous improvement under the headings of culture, competence and customer outcomes, and report back on their performance to the public each year.
What is the background to the setting up of the new banking standards review council?
Primarily, it is the banks’ desire to begin to repair the damage to their reputation in the post-2008 financial crisis and the various scandals around Libor, interest swaps and PPIs, with the impetus from the recommendations of Richard Lambert, a former director general of the Confederation of British Industry, that have been the driving force behind this. The new BSRC, which will be independent of the banks, although funded by them, is the pathway to rebuilding confidence and trust in the banks.
What will the BSRC do in practice?
The BSRC will work with banks to create a new code of practice for the banking industry and will effectively be its professional standards body. The council will:
Who is expected to make up the council?
There will be a chairman and a chief executive. A panel to be chaired by Mark Carney, the Governor of the Bank of England, will appoint the chairman and ratify the appointment of the chief executive. There would, of course, be other appointments to make the council functional.
What other recommendations (other than setting up the BSRC) are covered in the May report?
The BSRC will exist to complement the work of the regulators by focusing on identifying and championing good practice, aligning its work with theirs and avoiding duplication. The professional bodies would be supported by the BSRC to avoid duplication and work with them and the industry to change perceptions of the value of their programmes.
How will the BSRC fit into the current regulatory structure?
By being complementary, and there is a clear recommendation on what the BSRC should not do—namely not absolve the leadership of banks from their role in raising standards or do the work of the regulators or handle customers’ complaints.
What advice should firms give to their clients?
The acceptance of Richard Lambert’s recommendations is a real push to deliver excellent services to clients in accordance with an industry-wide code of practice to raise standards of behaviour and competence in the banking sector, as well as being transparent by the yearly publication of banks’ performance.
Interviewed by Jane Crinnion.
The views expressed by our legal analysis interviewees are not necessarily those of the proprietor.
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