What has been the problem with our financial services sector? It seems that so many of our present woes can be connected with it – from the housing bubble to the credit crunch, the Eurozone crisis and currency speculation to the dodgy marketing and selling of PPI and mortgages. The LIBOR fixing scandal seems to be just the latest in this sad litany of disasters which have transformed the public perception of bankers to something akin to – or maybe even worse than – politicians with duck-houses or phone-hacking journalists.
There has been a lot of finger-pointing and blaming going on, but I don’t really see much purpose in trying to apportion blame to anyone. When it comes to human nature, I’m a bit more optimistic. I do not believe that there are really so many bankers who are all so deceitful and manipulative that they would deliberately go out to do wrong.
What I think is more helpful and more constructive is offering suggestions for the future to do our best to prevent future harm and where necessary to reconcile and restore trust in the ability of financial services to create wealth in a way which is consistent with an ethical framework which we can all agree on.
The Church and Society Council has recently done this in its submission to the Westminster Parliamentary Commission on Banking Standards. The Council has urged the City to consider its values and the devastating implications of putting profit before ethics, and suggested that taking excessive risk should become a criminal offence.
The way in which our economy is structured means that many people are marginalised by market forces, and this is of concern to the church.
Banks are not simply businesses, but provide an essential economic service fundamental to how we operate as a society.
It is necessary that they operate on principles which are driven not simply by profit, but take cognisance of the wider effects which their actions have on society, especially the most vulnerable.
The Council has said that excessive risk-taking should become a criminal offence as many people at the top in banking have reaped rich financial rewards with no threat of prosecution when their actions do harm to the consumers they are meant to serve.
In addition, we feel that non- executive directors should also be liable to sanction in the event of their failure of provide proper oversight.
Our response also challenges tax havens, argues for more effective supervision of Chief Executives through improved auditing and the presence of more shareholder and employee representatives on Boards, calls for the end of the present ‘bonus culture,’ and recommends changes to the Financial Services & Markets Act 2000 to permit all victims of mis-selling to obtain proper redress through the courts.
Earlier this year, the Church of Scotland’s Commission on the Purposes of Economic Activity published its final report. The thirteen member commission comprised people with expertise from the fields of business and economics, church and community, politics and trade unionism. In their report they argue that it is necessary to:
- Reduce inequality
- End poverty
- Ensure sustainability
- Promote mutuality