Justin Wellby: Banks need “The fear of hell, hope of heaven”
Last night St Pauls cathedral hosted the final session of their “The City and the Common Good” series with an event exploring “Good Banks”. BBC Economic Editor, Stephanie Flanders moderated what she called “a dream team panel” of prominent voices in the debate:
Justin Welby – Archbishop of Caterbury (keynote)
Anthony Jenkins – Group Chief Executive, Barclays
John Fingleton – CEO, Fingleton Associates; former CEO, Office of Fair Trading
Laura Willoughby MBE – CEO, Move Your Money
Justin Welby’s contribution was an exploration of how a “good banking culture can be developed”. As a member of the Parliamentary Commission on Banking Standards, now in perdure before publishing its report, he was careful to avoid violating rules by giving any indication of what the commission’s findings would be. Instead he stuck to very general themes suggesting that the city of London and banking community risked segregating itself from the society upon which it rests. As a sector able to absorb the best and brightest from across the nation, Archbishop Welby asked if the city could be a vector to spread benefit back “through all the canals and tributaries of our national economy from a well of such talent.” Without this return of benefit he argued the banking sector cannot fulfill a duty to be an industry of “Virtue, value and purpose”.
Addressing how this is to be achieved Archbishop Welby outlined a clear skepticism of regulation. He outlined the difficulty in expecting only 60 part-time regulators to police banks that may have many thousands of employees. Instead he thought change must come from “a deliberate self-bursting of banking’s bubble of self-regard”. Driving this should a participatory approach to staffing, encouraging members to raise issues because they feel a responsibility towards their industry. He suggested the public had been overly critical, behaving as if “[for banks] sin did not exist and redemption was not possible”. The route to change lay in bankers themselves accepting the consequences of their actions as well as the possibility of making amends, “the fear of hell, hope of heaven” as Archbishop Welby put it.
Other contributions responded to this theme. Anthony Jenkins stressed that virtue must go beyond charitable exercise to become “woven into the fabric of banking”. He asserted this mission was well underway at Barclays who, re-discovering their Quaker roots, are embracing the idea that profit and virtue are not inimical factors but instead enable each other.
John Fingleton stressed that strong competition and good markets were the most effective antidote to greed and biggest boost to ethics by providing the “burning platform” of motivation to drive higher standards. He argued; We will know when we have good banks when they: Meet the needs of their customers, meet the needs of the economy and are once again trusted by the population. He also expressed frustration that after a career of representing consumers they too often worked against their interests asking “for ethical banks, and not switching accounts; demanding corner shops and then going to Tesco”.
Laura Willoughby followed on, suggesting the banks cannot be expected to reform themselves without increased consumer pressure. For her, the situation is of unequal power between the consumer and provider of banking services, one best amended by “ordinary people exercising their consumer rights” and switching from banks they deem unfit. Only under the pressure of a diminishing client base, she argued, will we see reform in banks.
It made for a fascinating debate and was skilfully chaired by Stephanie Flanders who kept proceedings on course and probed the line of Archbishop Welby’s vow of silence with both care and humour.
With the issue sure to hit headlines following the Banking Standards commission report, we look to observing further reactions as Britain grapples with this crisis of confidence in one of its largest sectors.