"Whenever I hear the word ‘culture’ I release the safety-catch of my Browning," Goering didn’t actually say, but might well have done.
Why he, and other dictators before and since fear culture, is that they know it is something they cannot control. It is something that cannot be ordered.
So why is ‘culture’ the current buzz-word that everyone is using at the moment as banks hurry to repair damaged reputations? Damage done during a devil’s decade when customers, clients, and shareholders seemed to come last, way behind the interests of those who raced to maximise bonuses, while the reputations of great banks, built over generations, received a terrible battering.
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Here is Clive Adamson of the FCA saying, in an excellent speech, "The conduct question is more a cultural and business model challenge." Here is Sir Richard Lambert, saying that his new Banking Standards Review Council – which we should all back – will require participating banks to "commit to a programme of continuous improvement under the headings of culture, capability and customer outcomes…"
And in the Netherlands, they want to make us swear an oath, in the name of God, to maintain a professional culture in banking.
Back to Herman Goering and his like for a moment. They feared culture because they could not command it; true culture is grown slowly within people and embodies long-lasting tradition, habits of morality, and internalised conscience. And that, I suggest, is what we have to nurture all over again.
We cannot contract out standards of behaviour to the Compliance Department, and defend ourselves by saying we ticked all the right process boxes. Here is Clive Adamson again: "Two or three years ago, conduct was something that most firms thought of as a compliance issue, and so delegated it to compliance functions."
This is why we are right, all of us, to be considering the cultures of our organisations. If we have let the wrong culture become embedded, we must consciously set about rooting it out, and replace it with good culture. And we must be realistic, that an embedded bad culture can be as difficult to fix as can a good one be to ruin. Just as a good culture is the best defence against wrongdoing, because it is embedded in the habits and the conscience of many people, so a bad culture once established, needs constant challenge and effort to root out. It won’t be removed by fiat from on high, nor just by the publication of admirable statements of intention.
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By GlobalDataNor, really, by taking oaths. After all, the old Soviet Union had an admirable constitution and bill of rights, but much good it did the people in the Gulag. What is required is the hard work of endless face-to-face argument and a good deal of mental arm-wrestling when conduct is doubtful; by not passing by on the other side when we see something wrong; by example from the top, certainly, but also protest from the bottom, and the middle too for that matter, if things are awry.
How can we tell a good culture from a bad?
Here are a few tests which I find help, but you will all be able to think of others.
Test one. Would we say in public, what we say behind closed doors? For example, would we mind a client knowing everything about the product we are selling – how much we are making, exactly where, taking everything into account? To put it another way, putting commercial competitive confidentiality and client confidentiality aside for a moment, would we be comfortable if clients were eavesdropping on what we say to each other about them andabout the products we sell them?
For us, in Private Banking, this sometimes means being honest about the fact that we are expensive: and justifying the fees on the basis that the quality of what we provide is truly good. Customers will pay for a Rolls Royce if it truly is a Rolls Royce.
Test two: do we believe our own advertising? If it was no good contracting out our morality to the Compliance Department, it is even less use contracting it out to an advertising agency. I have noticed that there is a huge surge in our businesses in advertising to protect our brands just now. The money will all be wasted if our promotions do not represent reality. In fact it will be worse than wasted, because it will stoke up cynicism among our clients, who tend to be very intelligent people. The world’s best-selling fiction author, J.K.Rowling, made her fortune because the books sold by word of mouth. I would rather work for a bank that grew the same way than because it had a wonderful brand consultant. Which is not to say that if we are getting it right, we should not say so.
Third and last test: do we feel proud of what we do? To be an honest banker in a good bank is to follow a trade, or a craft, as one of those advertisers has it at the moment, which is as honourable as any, and without which none of the others can themselves prosper. Banking, to be pompous about it for a second, represents social-co-operation and trust in practical action. So when we meet our friends who are teachers, or doctors, or charity workers, or engineers, or civil servants, my test is, do we stand up for ourselves? If we do, it is likely that we are working within the right culture at our place of work. Or if, like some of those in my old trade of politics, we become a little slippery in the back of the taxi cab or at the dinner party about what it is that we actually do, we may be giving ourselves a bit of a clue that all is not well.
Mark Carney said the other day that "there should be clear consequences including professional ostracism for failing to meet the standards" we all desire. That sounded admirably old fashioned: something about eyebrows comes to mind, and it was no less powerful for that. But the corollary of what he said should also be true. When the standards are right, we should be proud, and stand up for our profession.
That is what days like today, and the awards which will be announced later, are all about. I congratulate the Conference on celebrating the best in Private Banking, and for working to restore the reputation of an industry which is central to the well-being of all our societies.
Thank you.
Lord Waldegrave of North Hill, Chairman of Coutts&Co
