Banking Standards Board review shows the need for a duty of care

Responding to the Banking Standards Board second annual review, the Financial Services Consumer Panel is reiterating its call for a statutory duty of care on banks and other financial services providers.

The BSB’s review shows that one in eight bank employees believe it to be difficult to progress in their careers without “flexing ethical standards”; and a third are worried about personal consequences if they raise concerns. The report also found that only a quarter of bank employees ‘strongly agreed’ there was no conflict between their organisation’s values and how it did business.

The Panel believes that a duty of care would engender long-term cultural change in the industry as it would provide clarity to the rules governing the banker/customer relationship and oblige financial institutions to act in their customers’ best interests[1].

Sue Lewis, Consumer Panel Chair, said: “The BSB is to be congratulated for its thorough research. Unfortunately it shows there is still a long way to go before the promises we hear from CEOs translate into genuine, customer-focused, change. Banks have had almost a decade since the financial crisis to put their house in order. They will not do it voluntarily as they know customers don’t switch to better behaved banks, or shun the unethical. The regulator rests on the principle that firms should ‘treat customers fairly’. Time and again this is shown not to work. Firms can, and do, stick to FCA rules while treating their customers badly. We believe a duty of care is the way forward, to remove conflicts of interest and hasten the culture change banks say they want.”

ENDS

MEDIA ENQUIRIES:

Vincent Paulger (Consumer Panel): 020 7066 5338

NOTES TO EDITORS:

1. The Consumer Panel is a statutory body under the Financial Services Act 2012.The Financial Services Authority originally established it in December 1998. The Panel advises the FCA on the interests and concerns of consumers.The Panel is independent. Its views are its own and do not represent those of the FCA.

2. The Panel’s membership is drawn from a broad range of backgrounds with expertise including market research, law, financial services industry, financial inclusion, European Regulation, financial regulation, consumer advice, campaigning, communications, compliance and later-life issues.

3. The emphasis of the Panel's work is on activities that are regulated by the FCA, although it may also look at the impact on consumers of activities outside but related to the FCA's remit. More information about the Panel's work is available on its website: www.fs-cp.org.uk or via its LinkedIn and Twitter accounts.