Professional bodies can lead the banking industry’s efforts to reclaim professional standards – but only if they have greater employer recognition and credible teeth, according to a report from the Centre for the Study of Financial Innovation (CSFI).
The report, entitled ‘Setting Standards: professional bodies and the financial services sector’, by journalist Keyur Patel, examines whether banking and financial services need more powerful professional bodies, as in other professions. Only one in four of around 500,000 individuals working in UK banking hold a professional qualification.
In a foreword to the report, Sir Richard Lambert, who led the Banking Standards Review (BSR), says: “The way banks structure their budgets often discourages investment in anything other than short-term training – giving people the technical capacity to do today’s job, but not to get a sense of the bigger picture for tomorrow. The banking industry won’t get the professional standards it so obviously needs so long as this attitude prevails.”
The newly created Banking Standards Review Council (BSRC), supported by the UK’s biggest banks, will tackle the issue of professionalism, and the report’s analysis feeds into this debate. It suggests five key indicators of efficacy for professional bodies:
- Relevance, especially when they do not have a statutory role.
- Authority – they must be recognised and respected by employers and decision-makers.
- Independence, including challenging the sector on behalf of the public interest.
- Rigour, pushing members to improve competence and behave ethically.
- Teeth or the ability to police a code of conduct and other conditions of membership.
Based on interviews with professional bodies, their members, financial institutions and regulators, the report – prepared with financial support from the Chartered Institute for Securities & Investment (CISI) examines:
- Recent trends in the activities of professional bodies in UK finance.
- The case for and against making professional qualifications mandatory for bankers.
- Whether professional bodies need statutory powers to have credible teeth.
- The quality of existing qualifications and what employers’ demands for higher standards.
It argues that the BSRC should aim to be an authoritative body in the market for professional qualifications, increasing transparency and encouraging competition, high standards and employer engagement. It should not aim to become a professional body itself by taking on individual members.
“The BSRC has a very difficult job ahead, not least to win over a sceptical public. But if through its power to name and shame, it is a springboard for professional bodies, it could play a powerful role in the‘re-professionalisation’ of banking,” said the report’s author, Keyur Patel.
“It is up to the professional bodies to step up to this challenge. There are questions they need to address around the rigour and consistency of their qualifications, and how they discipline members and enforce their codes of conduct.”
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