Annual Review 2015/2016


The BSB’s work in 2016 will be informed by the key themes that emerged from the 2015 assessment (described in the preceding section) and the subsequent and ongoing discussions with boards and executive teams of the participating firms, as well as by the BSB’s wider engagement with other organisations, groups and parts of civil society. It is also important that this engagement takes place across the UK and not just in one part of it, and the BSB will be following on from its successful visit to Birmingham in October 2015, and a very helpful series of discussions, with further visits over the coming months.

Discussions with participating boards of the 2015 assessment reports confirmed the validity of the themes identified, and highlighted some as being of particular current interest to a number of firms (such as speaking up and training). They also underlined the shared priority attached to finding better ways to measure outcomes and benchmark performance.

While the assessment exercise is a core element of the BSB’s work, it is far from its entirety. In 2016 the BSB will also complete and build on projects already initiated, including on professionalism, on the Certification Regime and on law, regulation and ethics. The conclusions of these projects (or of their first phases) will themselves inform subsequent priorities and the shape of ongoing work.

The BSB’s approach to addressing all of its work will remain one of working flexibly, collaboratively and efficiently throughout, avoiding duplication and working with and through partners as appropriate while retaining independence and impartiality. This is particularly important with respect to standard setting. Success will be defined not by the number of BSB standards set in any one year, but by the value, relevance and usefulness to customers of the standards set. Where an appropriate standard already exists under the auspices of another organisation, we will not duplicate that work (though we may support it). Equally, where a gap exists and we consider that a voluntary standard would be of benefit, we will consult on and take forward that work.

The key areas of work, described in more detail below, include:

  •  designing and undertaking the 2016 assessment exercise, building on the 2015 pilot and scaled up to include a wider number of member firms, informed by the key themes identified in 2015;
  • promoting professionalism across all parts of the banking sector and at all levels;
  • exploring the relationship between law, regulation and ethics, and what this means in the specific context of banking and banking culture; and
  • developing voluntary standards that will support a better service for customers and other relevant parties across the sector.

In addition to these areas of work, the BSB will continue to foster and facilitate learning from within and outside the banking sector via its series of breakfast seminars, conferences, UK-wide visits and other member events 8.

The 2016 agenda will be kept under review and adjusted as needed to ensure that it remains relevant, timely and appropriate, and that it is undertaken as effectively and efficiently as possible.

  1. Details of past and forthcoming BSB events can be found at


An important part of the BSB’s work in 2016 will be to develop the assessment approach and extend it across a wider number of firms. All BSB member firms with a legal entity domiciled in the UK are eligible for an assessment. Smaller firms, for whom an annual exercise may not always be appropriate, can choose to opt in to the assessment exercise in any given year. Given the centrality of direct board engagement to the assessment, firms that operate in the UK as a branch and have their headquarters overseas are not currently eligible for the full assessment exercise (though as outlined further below, will be included in the survey element).

The 2015 assessment was, as has been noted, a pilot exercise conducted with ten firms. In 2016, the first year in which the BSB has been open to membership, the assessment will be open to all eligible member banks and building societies.

Last year’s assessment was primarily a qualitative exercise based on boards’ and senior executives’ response to our questionnaire, and focus groups and interviews with small samples of staff. The exercise by its nature required subjective judgements and, because it was based on small sample sizes, the findings from the staff engagement were not statistically representative.

In 2016 the assessment exercise will be both more systematic and more comprehensive. It will cover a greater number of firms and, very importantly, will develop and incorporate quantitative approaches aimed at enabling firms to benchmark themselves against their peer group. It will adopt techniques to enhance our understanding of what influences behaviour, and incorporate the views of (and take into account the effect on) a wider population of the sector’s stakeholders. This wider group includes customers, representatives of civil society and (for banks, though not building societies) institutional investors – the latter, a potentially important influence on the behaviour of the firms they own and invest in.

In designing the 2016 assessment we have been working with selected external partners from a leading consultancy firm, as well as with academics from the London Business School and the London School of Economics. We are also continuing to engage with and learn from a wide range of organisations and individuals working in similar or related areas, both in the UK and globally (including, for example, in the US, the Netherlands and Malaysia) and from within and outside the banking sector.

The assessment work in 2016 and beyond will be multi-disciplinary and innovative. It will also be firmly rooted in identifying what is evidencebased, relevant and of practical application. We will endeavour, over time, to make as much as is appropriate of our methodology and approach open-source in order to facilitate dialogue, invite challenge and contribute to improvement and progress elsewhere.

Some elements of the annual assessment exercise will vary, year on year. There may, for example, be particular themes we wish to examine at any one time (such as the role of Remuneration Committees, or challenge and speaking up). It is also important that the approach used for the assessment does not become over-familiar or vulnerable to being gamed. We need, therefore, to strike the right balance between ‘core’ questions and techniques, and topical or themed elements. We will also, over subsequent assessment cycles, pilot new elements with individual firms that may or may not then be extended across the whole set of firms being assessed.

The assessment cycle in 2016 and in future years has naturally begun by drawing on as much relevant recent work and research as possible to ensure that whatever the BSB subsequently does is genuinely additive and fully informed. This encompasses the BSB’s own previous findings, work undertaken by firms themselves, and research and analysis from a range of sources including (but not confined to):

  • academic research on culture and behaviour;
  • reports on culture in the financial services sector by other organisations;
  • relevant publicly available data on banks and building societies (eg, complaints data);
  • case studies of conduct failure and poor practice;
  • lessons and experience drawn from other sectors;
  • lessons and experience drawn from outside the UK; and
  • existing culture tools and benchmarks.

Building on existing knowledge, core elements of the assessment exercise will then include:

  • a short set of questions to boards and senior management teams about their perspectives on progress over the past year, the challenges and priorities for the coming year, and the information they are using to identify these challenges and measure progress;
  • in-depth interviews with individual non-executive board members, in particular, with the heads of Remuneration Committees and committees that have responsibility for culture, conduct, values, reputation or similar;
  • focused surveys of staff, not to duplicate what firms may already be doing in their own and often extensive staff engagement, but to test on a consistent basis across firms the efficacy of the ‘tone from the top’ and the alignment of views and practices across the organisation, and to identify both good practice and progress, and any emerging concerns or issues, with a view to facilitating systematic benchmarking across member firms and within peer groups; and
  • qualitative exercises with staff such as focus groups, interviews and message boards to provide a deeper understanding of issues addressed or raised in the survey.

These core elements may then be combined, subject to whatever is relevant to the issues at hand or the institutions involved, with, for example:

  • techniques drawn from a mixture of disciplines including, where relevant, ethnography, sociology, psychology or neuro-science to provide new and different perspectives on longstanding issues; and
  • feedback and views from those the bank or building society engages with, eg, customers, investors, members, clients, regulators and prospective employees (eg, students).

The focus for 2016 will be on getting the core elements of the assessment exercise – the foundation for future years – right, in terms of both design and implementation. We will, nevertheless, deploy a range of different techniques in developing this core approach, and trial or introduce new elements where possible or where firms have a particular interest in an approach, with a view to their potentially wider subsequent application.

As noted, not all BSB member firms in any one year will participate in the assessment exercise. Smaller member firms have the choice to opt in, and branches of overseas firms are not eligible for practical reasons. We intend, however, to extend the survey element of the assessment exercise to all BSB members, including branches, in order to provide all firms with the ability to benchmark themselves against the sector and their peers, and to gain as broad a view as possible of developments across the sector.


The Parliamentary Commission on Banking Standards found that ‘banking culture has all too often been characterised by an absence of any sense of duty to the customer and a similar absence of collective responsibility to uphold the reputation of the industry 9 ’, and argued that a greater focus on professionalism could be an answer to this. In parallel, a much commented-on feature of the banking sector in our own engagement with firms and other bodies has been the perceived decline in the acquisition of specific, banking-related professional qualifications among people who work in the sector, and the contrast with eg, accountancy or legal services that have accepted professional qualifications and professional bodies.

The question of whether banking is a profession is of course a matter for debate. Some would argue that it comprises several professions; others, none. It is also clear that the knowledge and skill required on a trading desk will differ in many respects from that required in corporate finance, and that this will be different again in other parts of the sector. While technical skills and understanding may differ, however, there may be core competences, aspects of behaviour and values that all staff working in the sector might be expected to share. That people working in banking should behave ‘professionally’ is, perhaps, rather less contentious than an assertion that banking is a ‘profession’ as traditionally defined.

We are interested in whether a more ‘professional’ approach to banking would improve behaviour and competence across the industry. Furthermore, given that two of the themes from the 2015 assessment exercise related to feeling confident about challenging and speaking up and having sufficient time, support and guidance for continuing professional development, we are also interested in exploring the appetite among members firms and professional bodies for enhancing the scale, scope and activities of such bodies in line with those found in professions such as medicine, engineering and accountancy, and whether such an approach could be beneficial in a banking sector context.

To answer this question and arrive at evidence-based, useful and useable recommendations, the BSB is working with a team at the University of Leeds to investigate how professional qualifications are currently used across the sector; if this is changing with the onset of the Senior Managers and Certification Regime10; if and how this would be affected if the qualifications on offer were any different; and whether there is merit, from the perspective of firms, in a stronger role for professional bodies in banking.

The project involves surveying and interviewing, in this context, banks and building societies, professional bodies and a wide range of other interested groups. This evidence-gathering exercise should be completed during the second quarter of 2016, at which point we will engage with firms, professional bodies and other interested parties on the findings and next steps.

We have also been considering how the broader issues of professionalism interact with the new Certification Regime (part of the comprehensive framework of regulatory change coming into effect this year and intended to ensure better accountability, professionalism and responsibility for behaviour, competence and culture in banks and building societies). Of particular interest is whether a common approach across firms could support both the objectives of the regime and the skills and development of the people covered by it.

We have, to this end, been working with member banks and building societies to develop a common understanding of the policy and operational issues associated with Certification, to identify examples of good practice, and to ascertain areas where a common approach across firms might be advantageous. These latter areas might include: addressing issues associated with employees who move between organisations; issuing regulatory references when staff move between firms; and dealing with overseas employees. This work, initiated via a working group in January 2016, is ongoing and will report to members in the second quarter of 2016.

Law, regulation and ethics

Compliance with the rules and standards prescribed by legislation or regulation is, in banking as elsewhere, one way of securing acceptable practice and conduct, but cannot of itself be sufficient. Legislation and regulation will always be incomplete; they will not achieve their aims unless those being regulated also respect and live up to more generic standards, and do not view legal or regulatory constraints as formalities or something to be gamed. These generic standards will encompass both ethical standards (for example, honesty, trustworthiness, fairness) and professional standards (such as competence, understanding and reliability). The extent to which firms and the industry as a whole meet these standards is a function less of regulation than of individual character and institutional practice and culture.

The balance between law, regulation and ethics is an important one. It is also a variable one. There is a saying that ‘ethics begins where law ends’, but the handover point is not fixed; when trust in the banking sector’s ability to manage itself and maintain high ethical standards declines – as in the financial crisis – regulation (legal discipline) will naturally move in to fill the gap that is seen to have been vacated by ethics (institutional self-discipline).

Effective, proportionate regulation is vital for well-functioning markets and societies. In the area of culture, behaviour and competence, however, regulation can only go so far. While conduct can be regulated, there is no ‘good’ culture that can be mandated, and regulation cannot compel someone to behave professionally. Culture, behaviour and competence are the responsibility not of the regulator but of each individual firm, or more specifically of the board of each firm and the executive team. In addition, it is the collective responsibility of the industry as a whole to demonstrate that it is managing itself in this regard, and to maintain trust in its ability to do so. Without which a vacuum will be created that regulation will then be asked to fill.

Working with Queen Mary University of London’s Centre for Regulation and Ethics and with members of the judiciary, we have begun to study how standards of behaviour and competence in the UK banking industry are set and shaped by law, regulation, codes and other standards, and to ask whether this balance is working effectively, and what this might imply for the industry. This is not a study devised to conclude that less regulation would be beneficial. It is, rather, asking what needs to be in place alongside regulation to produce the highest standards of behaviour and competence in banking; what is needed to fill the space beyond the ‘boundaries of regulation’, for that regulation to be not only bounded, but to work effectively. Its practical implications are therefore likely to be less about regulation per se, than about the gaps left around it, and the responsibility of the industry in filling that space.

This study is intended to have implications and benefits not only for the BSB’s own work on professionalism and standards, but also across other sectors and jurisdictions. We will be continuing with this work during the first half of 2016, and reporting publicly on its conclusions later in the year.


The word ‘standard’ has been used frequently in this report, and the BSB is, as we have seen, committed to helping raise standards of both behaviour and competence across the banking sector. This can be done in a number of ways, including assessment and work on professionalism, but also by a commitment on the part of firms to reach a particular performance or service standard, to make this commitment public and to be accountable for it.

Identifying, developing and setting specific voluntary standards agreed with member firms, is part of the BSB’s remit. With membership now open, we are exploring with member firms areas where such standards would be most effective in providing a better service and in raising aspirations and performance, taking into account existing standards, in all or part of the sector. Where potential areas are identified, we will consult with all relevant parties to ensure that, in line with good practice in standard-setting, the resulting standards add value and are fit for purpose. Questions as to how a firm is meeting an agreed standard will then be incorporated in the annual assessment process, and a verification mechanism established for firms not eligible for or not participating in the assessment exercise.

It is important that any standards issued by the BSB are implementable, properly targeted, and do not duplicate what already exists. Where a satisfactory voluntary standard is already in place or being developed, the BSB may support it or – if it currently only applies to part of the sector – consult on extending it across its membership. It will not, however, spend time and resource reinventing the wheel; and in a sometimes already crowded standard-setting space, we will seek always to simplify rather than complicate matters, for firms and customers alike.

BSB standards themselves will need to be stretching, positive and aspirational. They should not be simply a statement of current practice. They will also need to be clearly differentiated from minimum regulatory requirements. A voluntary standard – as we are exploring in our work on law, regulation and ethics – is not a regulation by another name. Standards play a different and complementary role to that of regulation. They may also need to change over time, to ensure that they remain useful to customers. BSB standards, once agreed, will be kept under review to ensure that they remain relevant, visible and ambitious.

Some of the BSB’s existing work areas, especially on professionalism, may themselves suggest issues on which specific voluntary standards would be helpful. Another potential area is that of the relationship between banks and small and mediumsized enterprises (SMEs), characterised in recent years by some high profile instances of customer detriment, and where not all dealings of banks (or other authorised firms) with SMEs are regulated11. The Financial Conduct Authority (FCA) invited views in November 2015 on the way in which SMEs that use financial services are treated under FCA rules, and asked whether – among a number of options – voluntary codes and standards might be helpful in raising the level and consistency of service provided to SMEs12. The scope for standards to have a beneficial impact on the banking sector’s relationship with SMEs will be considered by the BSB as it prioritises its work on standard-setting over the coming year.


  1. (excerpt from paragraph 19).
  2. and strengtheningacc/default.aspx
  4. ibid.


The BSB has come a long way in a very short space of time. It has also, however, a long way to go and – as its ambitious agenda for 2016 demonstrates – no time to waste. The publication of this first annual review marks an important public milestone, but one that serves to put into even clearer perspective the distance still to travel.

It is not the BSB that will raise standards in the UK banking industry. Only the industry itself can do that. The responsibility for and ownership of culture cannot be delegated to the BSB, the regulator or anyone else; but where firms are committed to raising standards across the sector (and joining the BSB is a public statement by member firms of just such a commitment), the BSB can and will provide challenge and support that will help them achieve this.

A trustworthy UK banking sector will be one in which those working in banks and building societies in the UK can say not only that they are proud to work for their own firm (as many already are), but that they are proud to work in the banking sector. And the industry should set the bar higher still; it should aspire to ensure that the UK can be proud of its banking sector. This is clearly not going to happen quickly, and some might be sceptical of it occurring over any time horizon; but if – and only if – the industry is committed to making it happen, it can and it will. The industry’s future is in its own hands.