This is another week where the FCA has found the banks wanting fining Lloyds £28m for "serious failings" in its bonus schemes for banks which saw staff threatened with pay cuts or demotion if targets were not reached.
If you look at some basic ethics theory there may be an explanation as to why the sector keeps on getting it wrong and why they still fail to get it right.
If we look at two kinds of theory, one "deontological" (from the Greek word for "duty") focuses on just doing the "right" thing regardless of the outcomes (consequences). The other, teleological (from the Greek word for "goal") focuses on the concept of the outcome justifies the means ie if you get the right result it doesn' matter HOW you got there.
This latter theory is possibly behind all the poor treatment of staff and customers and all the mis-selling ie the sole focus on "goal"- making profits, regardless of the on-going consequences ie the HOW, the conduct and behaviours. What is needed now perhaps within the banking sector is to adopt the unfashionable deontological theory where measurement and rewards are based on the behaviours which engender "doing the right thing" ALL THE TIME.
That's why this blog is deliberately focused on EVERYDAY ethics and EVERYDAY decision making. It is essentially about the need for cultural change and paradigm shift "HOW we do things around here" or as the FCA states "customers, not sales, must come first".
. The FCA is quite rightly on a war path and as more individuals get fined for getting it wrong eg a former finance director of the Bradford and Bingley has been fined £30,000 today for failing to provide accurate information to the board, this will hopefully now focus the minds of the leaders on making significant change- perhaps these kind of threats of personal financial penalties will prove just as effective for the sector's leaders as their sales staff.
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