When I opened a bank account at the age of 18, I did not have much money to put in it. It was not an investment, but a convenience. That approach was the norm. Banks existed to provide a service, and they did so in a generally customer-friendly fashion. Certainly, when I visited the local branch (these were the days before online banking) I was recognised, and greeted by name.
It is not of course surprising that the way in which banking is done has changed. Nor are the changes in general regrettable. Online facilities have made things much easier. If I balance that advantage against the loss of the highly personal friendliness of the old days, I have no complaints. Those changes have greatly increased the service.
A different role
So far so good, but in those “old days” you could assume that the approach of your bank would be not only friendly, but ethical. The banks were very much part of the community, and their role was to provide a service to it.
How different the position is today. For months we have been faced with masses of information about appalling behaviour by many of the major banks. Regulators in the U.K. and the U.S. are investigating more than 20 banks for rate rigging. In London, Bob Diamond, who was Chief Executive of Barclays, resigned, under pressure, after the bank had received a massive fine for its part in manipulating Libor — the interbank offered rate. In his appearance before a parliamentary committee, Diamond showed no sense of feeling any responsibility, or indeed any knowledge of what had happened in the bank of which he was in charge. Many people found that totally incredible. Surely the crucial thing about being in charge is that you need to know what is going on. If you do not, how can you properly exercise your responsibilities?
Senior people in many of the major banks have shown similar unwillingness to accept responsibility for things going wrong. By contrast, they have generally shown no unwillingness to accept vast salaries, and vast bonuses. Why a bonus is necessary for someone who is well paid for doing a job is not clear. It was certainly not the general expectation when I entered the employment market; the expectation was that you would do a job well and responsibly, and would receive an appropriate salary.
Even less clear is why a bonus should be paid to anyone who has not done the job efficiently. Indeed, the whole bonus culture provides a depressing illustration of a fundamental fault in the system, and a fundamental failure to demonstrate any understanding of ethical behaviour.
The public has lost patience with the banks, and no wonder. The Observer put it strongly and starkly in its Business Leader which appeared on the day when I am writing this. The editorial declared: “Britain’s bankers are swashbuckling pirates in a long tradition that stretches back 400 years. Pirating is not exclusive to Britain but we have always been adept at stealing and extorting under the guise of free trade”.
Need to get tough
You do not have to accept that assertion uncritically to recognise that the behaviour which is so much in the news is a reflection of something seriously wrong with much of our society. Asking a few questions goes a long way to put the whole business in perspective. First question: Is it reasonable to expect that anyone choosing to do a job should accept that this choice carries with it the obligation to do the job efficiently and honestly? Second question: Is it reasonable to assume that many jobs require a sense of service, and not simply a wish to make money? Related to that, is it reasonable to assume that “service” should not be interpreted as “self-service”?
Those are hypothetical questions, and there surely ought not to be any doubt about the answers. Nor should there be any doubt about the need to impose punishment on bankers, no matter how senior, whose behaviour can be shown to have been illegal. This means that the government must be prepared to take a far tougher approach than it, and its predecessors, have taken in the past.
Above everything else, however, there is a need to change the assumptions about what providing a banking service — or indeed any service — requires. It requires efficiency, certainly, but it requires above all a recognition that ethical behaviour should be accepted as an ingrained element in the approach of those providing the service.
