Responsible Business?

One of the main culprits of the PPI mis-selling scandal was Lloyds Bank representing one third of compensation claims (c£5 bn). In response to this scandal and the Parliamentary Commission on Banking Standards report it has introduced a "Responsible Business" strategy and it looks pretty promising. There is top level support for Responsible Business with a non-executive director chairing the Responsible Business steering committee. Staff (or colleagues as they are termed) have Codes of Responsibility to follow, to generate the correct behaviours. Their incentives focus on both a mix of rewarding low-risk culture as well as meeting the needs of customers. They state "we are trying to do the right thing based on the right judgements. Being legal is not enough". And they have independent assessment of their Responsible Business metrics.

What I find concerning is that the company undertaking the Responsible Business assessment is the Lloyd's bank auditor.  It is one of the "big four" accountancy firms which were criticised during the financial crisis for not doing enough to warn about company balance sheets or scrutinise banks' books in enough detail. It might have been far more reassuring for all of Lloyd's stakeholders and more of the "right thing" if they had looked to other companies outside the established "club" to conduct the independent Responsible Business audit. We can only hope that someone in that vast organisation is really accountable for the true "independence" of these various audits and that the previously criticised culture of the Board for "an indisposition to challenge" has now changed..