The Group of Thirty (G30), a forum of leaders in international finance, is calling for far-reaching banking reforms to restore public trust. In its new report, entitled Banking Conduct and Culture: A call for sustained and comprehensive reform, it argues many banks still need to implement reforms to address the way bankers are paid, and dismissed if necessary. The forum is also calling for new approaches to the recruitment of bankers and for board members and directors to play a stronger role in bringing about cultural and conduct change.
The failure of banks to moves ahead with across-the board cultural and conduct reforms post-2008 could lead to still more regulatory rules and actions, the forum warns. The G30 recommends a series of comprehensive reforms aimed at implementing effective approaches to embedding ethical employee values and conduct within banks.
Specific proposals in the report include:
Among the major failures, the G30 found: a lack of sufficient focus and engagement from boards; inconsistent leadership by senior managers; relatively small cuts to CEO and executive team compensation when faced with persistent conduct and values problems or failures in the firms.
The report is based on nearly 80 interviews in 16 countries with central bankers and senior supervisors, bank board chairs and members, CEOs, and senior managers.
William R Rhodes, president and CEO at William R Rhodes Global Advisors and co-chair of the G30 steering committee said:
‘A core conclusion we draw is that most banks must aim for a fundamental shift in their overall mindset on culture. Banks must go back to placing service to individual customers and to communities first. They must promote corporate culture in disciplined ways, imposing sanctions on pay and terminating staff when necessary, even at the highest levels, when there has been wrongdoing. The bar must be raised as the failure to adequately address reputational risks is costly and over time it undermines the viability of institutions. This is not just right and good ethics, it also makes good business sense, and it is essential for ensuring a sound and healthy balance sheet.’