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Openwork chair on the ‘carrot and stick’ approach to network compliance

Openwork chairman and former Bradford & Bingley chief executive Christopher Rodrigues says the network adopts a ‘carrot and stick’ approach to compliance and will not be afraid to kick members out for non-compliance.

Rodrigues joined the network as chairman of the board last week, replacing Kate Avery. He was chief executive of Bradford and Bingley between 1996 and 2004, and also acted as an FSA non-executive director between 1997 and 2003.

Speaking to Money Marketing, he says: “You need tough controls and to be able to tell members that if they step over the line repeatedly we will have the courage to tell them they do not fit into this business or possibly in the industry any more.

“So you have to have both the carrot and the stick. But you should spend most of the time focusing on the carrot, which is helping people understand why compliant practices will help them grow their businesses.”

He says members’ risk controls and compliance procedures will continue to come under scrutiny after the business invested in updating its technology systems pre-RDR.

Rodrigues says in his time as an FSA non-executive director, he saw firms go on the defensive with the regulator but feels firms have nothing to gain from this approach.

He says: “I saw people in my time at the FSA put the shutters up and go ‘what do you guys know, dear regulator, we are going to run our business’. That is never a good place to work from.

“Firstly, the regulator can remove your licence to operate. But equally, regulators need to understand about how to make outcomes happen. So I have always found both personally and by observation that engaging proactively and talking about what you’re trying to do is infinitely more sensible.”

Referring to his time with B&B, Rodrigues reflects on the acquisition of the Black Rock estate agency business from Lloyds in 1998.

He says: “Would I have bought the Lloyds estate agency business to acquire their broking business? With 20:20 hindsight maybe not. At the end of the day they sold the estate agency business to people who made a fortune out of it. So the question is was it a bad business or did it need to be run differently?

“I have no regrets about buying it at the time because it built our mortgage distribution volume at a time when we were trying to get into a broked business.”

As well as the Black Rock estate agency business, B&B acquired John Charcol in 2000. The businesses were later sold in 2004.

Rodrigues also notes the rapid expansion of the lender’s balance sheet following his departure from the bank in 2004. 

He says: “The business that hit the liquidity crisis was very different from the business I left five years earlier. The balance sheet had nearly doubled in size. In the previous seven years we had grown from about £15bn to £20bn.

“It was grown much more rapidly than it was when I was there. Had I been in charge I don’t know what I would have done but I don’t think the balance sheet would have been quite the size that it was.”

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