ICAEW calls on banking sector to ‘detox’
Banks need to rebuild trust says the professional organisation
By CFOWorld.co.uk staff | CFO UK | Published 09:00, 07 November 12
Accountancy and finance professionals’ organisation ICAEW has called for the banking sector to be ‘detoxed’ in wake of recent debacles and the Libor rate-rigging scandal.
In a new report – titled Market Failures, Market Solutions – published on Wednesday, ICAEW said rehabilitating the toxic reputation of the financial services sector required radical changes in both culture and business practices.
While regulation is critical, the sector had to demonstrate responsibility by developing its own solutions to market failures, shifting focus from products and profits to services, it added.
The organisation said that rebuilding trust will be a challenge for the financial services sector for the next decade. It urged the sector to address its reputational issues to avoid being seen as incapable of acting dutifully, and called for the provision of useful services to customers to take centre stage.
Iain Coke, head of ICAEW’s Financial Services Faculty, said, “The financial services sector has to get onto the front foot and deal with the challenges it is facing, rather than wait for regulators and authorities to tackle the problems. If the sector acts defensively, the public will interpret this as trying to avoid its obligations, which will be like pouring fuel on the reputational bonfire.”
“The public can understand and forgive honest mistakes, but only if the sector acknowledges and deals with problems quickly and responsibly,” he added.
ICAEW said the banking sector’s renewed focus must be on providing services that support the economy rather than short-term profits.
To this effect, its report called on banks to take a constructive approach to dealing with regulators and consumers, place more emphasis on preventing avoidable failures and improve the way they react when problems occur.
It also called for the establishment of professional communities that set standards for behaviour and can apply sanctions to both individuals and firms. Among other recommendations, ICAEW also called for a change in business structures so that they promote integrity. The report was launched at a thought leadership event in London.
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