The thinktank ResPublica has published its research paper on the banking sector and it challenges the idea that the banking reform is a done job, arguing that at best, it can only be regarded as “half complete.”

Called “Virtuous Banking: Placing ethos and purpose at the heart of finance”, it acknowledges the amount of reform that has taken place, but goes on to list the problems still out there, including how customers do not have the advice and care they require to make sound financial judgements. It highlights the fact that confidence in the banking sector is at rock bottom and poses the question why we do not have an industry which we deserve.

But one of its main conclusions is that although there have been a raft of reforms which focus on regulatory issues, the root cause of the problem has been overlooked. The report says: “…a calamity that has its origins in the profligate and irresponsible actions of a significant number of bankers and banking institutions, urged on by a banking culture that was at its core fundamentally self-serving.


“There was on the part of organisations and people, a systemic disregard for the regulatory system, a belief that the pursuit of individual advantage would act for the advantage of all. The banking sector had, in short, lost its ethos.”

In short, the emphasis now needs to be on a better standard of behaviour, a sense of virtue that hitherto hasn’t been seen before.

It says: “Virtue allows us to introduce and restore the notion of good purpose. Banking must go beyond self-enrichment or basic transactional services. It not only performs a clear macro-economic function, it also has a key role in promoting prosperity and safeguarding the financial interests of its customers. The abandonment of much traditional high street banking has left too many people without the ‘wrap around’ advice and personal financial planning that they urgently need. This is in part why we save so little and take on so much debt.”


The report puts forward the view that there are three key areas that policy makers must focus on to recover what they regard as the all-important virtue and ethos in the banking sector: Governance; Competition; and, Diversity.

Within Governance comes the suggestion that all bankers swear an oath, an idea which has attracted the most debate and interest. Similar to the Hippocratic Oath, it would demonstrate to the public, says the report, a step towards greater professionalism.

In a plea for some sense of renewal within the banking sector, the report says that there is much to do: “It is clear to all those who would care to look, that an emptiness exists at the heart of our banking industry where the twin duties of care and stewardship should instead reside. This lack of inherent purpose is to blame for the propagation of a banking culture that, at best, incentivises fervent short-termism or, at worst, advocates the pursuit of greed over the common good.”


The report’s authors are David T Llewellyn, Roger Steare and Jessica Trevellick. 

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