The Financial Services Culture Board (FSCB) was founded in 2015 in response to the shocking malfeasance of banking executives that led up to the 2008 banking crisis and (as if they hadn’t learned their lesson) after the interest rate Libor scandal in 2012.
When bankers go bad, they go big, and that can affect us all. The mission of the FSCB — originally known as the Banking Standards Board — was to “help raise standards of behaviour and competence” across the financial services sector. It published research, ran behavioural trials and employee surveys, and facilitated the sharing of good practices among its members.
It was quietly shut this June, and its closure is the beginning of the erosion of accountability for bankers.
The FSCB was funded by banks paying annual fees, each probably amounting to less than a C-suite pay packet. It wasn’t an interbank chess club; it was an organisation created because of industry-wide cultural failures that rocked the very foundation of our economy.
Its role, amongst other things, was helping banks create a “speak up culture”, including effective whistleblower systems. Its objective was to instill certain values into the people with leadership responsibility at banks.
After all, the reputation of a once much-exalted profession had been hammered lower than a snake’s belly for many years, outstripping even estate agents.
There was something very rotten at the core of banking, and the FSCB was an attempt to address this.
But the banks have decided that the FSCB’s work has been largely done. Uh-huh.
The commission that recommended the creation of the FSCB, led by Sir Richard Lambert, the former Editor of the FT, pointedly declined to comment on its closing, a move brought about by the banks pulling the funding plug.
The timing was ironic. In May 2023, a month before the FSCB ceased operations, the Financial Conduct Authority (FCA) announced it was overhauling its approach to whistleblowers after its in-house research revealed less than 20% of those surveyed by the FCA were satisfied with its response to their concerns.
Without whistleblowers, the UK regulator’s ability to uncover criminality and rule-breaking at its earliest stages diminishes. Worse, bankers’ unlawful or illegal actions go unchecked, accumulate, are eventually discovered, and undermine confidence in the sector that drives the entire UK economy.
The organisation dedicated to helping banks raise “standards of behaviour” closed three weeks before Alison Rose quit NatWest over the Nigel Farage banking farce, and before she’s due to receive millions from a bank still 38.6% owned by the British public.
Having had leadership roles in investment and retail banking, I have seen first-hand how seemingly minor infractions can snowball out of control.
I can say this with certainty: small infractions that get a desired result without consequence, whether undetected (rare) or through someone turning a blind eye (much more common), are the beginning of what can quickly become massive, systemic failures.
It’s the blind eye that’s the most dangerous and the culture of “tacit approval by silence” that must be stopped. No one can say with a straight face that bankers’ behaviour or the cultural integrity of the industry has improved since 2008. In one year alone, between June 2022 and June 2023, banks were fined £178 million for regulatory failures.
Unlike their engagement with the FCA, whose rules banks are obliged to comply with to maintain regulated activity, they had the power to withdraw their financial support to the FSCB and let it wither away.
You can never protect anyone from themselves, and the banks are the corporate embodiment of this. As regulations tighten and the economy becomes more challenging, this is the worst possible time to lose the conscience of the sector.
History has shown that banks cannot be trusted to regulate themselves. A new ethics body is needed in its place, and this time, it should be mandatory.
