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Trust never sleeps

In discussion paper 18, the FSA says “ethics and regulation meet because standards of behaviour affect our ability to achieve our objectives set down by the FSMA”.

The objectives are of course – market confidence, consumer protection, financial crime, public awareness and confidence.

With regard to confidence, the FSA rightly says that “higher business and individual standards of behaviour promoting the integrity and the general probity of all working in financial services will enhance public perceptions and trust in the firms and individuals concerned.”

DP18 goes on to describe a “values-led business”. But more of that later.

The question I posed in an article on ethics in the January 16 issue of Money Marketing was: should ethics mean more than knowing when to take a risk and when to play it safe?

I have noticed a debate in the US about whether political lobbyists should take into account not only the interests of their industry clients but also the well-being of the community as a whole. In other words, should the representational process seek to enhance the common good!

It is interesting to apply this thought to the UK financial services sector, particularly those parts of it which serve the public directly.

We hear much talk of having a single lobbying voice. I often think that the approach which some of those who favour shouting from the rooftops is actually advocating promoting solely vested interests. How to get our own way, which is self-evidently right!

Leaving aside the difficulties of this approach, if we collide with others with opposed value systems, I wonder whether we are looking at all this at the right level.

If our objective is to create the conditions in which the insurance industry, for example, can do as much business as possible, that might be seen as a success for that sector.

But a good deal of the difficulty we have experienced in recent years has been because selling and promotion of certain financial products by some people did not take sufficient care of the needs of consumers.

In other words, the “partial good” of part of the community was inconsistent with a “common good” in which all benefit.

Perhaps our value system is set at too low a level. What would it look like if we were to say that we are here to further the common good?

Perhaps we might then be talking seriously about some of the measures which the Treasury has floated in recent consultations.

The outreach to those who are not presently engaging with the retail financial services sector is a case in point. Are there cost-effective business solutions to this problem? Is there a moral obligation to make financial advice available to everyone, not just the relatively wealthy?

One idea, which has not really been taken seriously by many people in the industry, is the suggestion that there should be a financial healthcheck package, marketed for a modest fee. What if we were to connect that up to systems which introduce the public to financial advisers who have subscribed to standards of knowledge and an enforced code of ethics, also published to the public?

Going back to the DP19,I think it is interesting to look at page nine, where the FSA talks about the characteristics of a “values-led business”.

This suggests that we should internalise an ethos of core values in spirit and not just in the letter. A values-focused business would go beyond rules and not just be concerned with compliance. The focus would be on continued reassessment, improvement, and the needs of the public.

In this approach, there would be awareness and discussion of ethical considerations at all levels in business and presumably also in the representative bodies for those businesses. More honest relationships and a strong learning culture might result.

I believe that an ethical and values-led agenda is not something where we should let the regulators take centre stage. Embedded in the insurance business are values which have served the public well for many years. What has gone wrong and how can we correct it?

Unfortunately, there is today a widespread belief that the industry has no values or at least that the values are subservient to making money out of the public. That is the measure of the problem.

If there is any one aspect of the industry on which we should all unite, it is rebuilding our reputation. It is predictable that rebuilding reputation will be seen by some as being about rebranding, new literature and corporate vision statements.

But all this falls on deaf ears unless we can change ourselves to set an example which encourages trust on the part of the public.

Would any readers be willing to join me in discussing these issues?

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