In a recent research paper by Katie Evans of the Social Market Foundation there is a call for a Good Culture kite mark in the financial services industry as a signalling mechanism to help consumers in their decision making. The research entitled "Good Culture in Financial Services, Does the Model Matter?" reveals that 40% of consumers would consider switching financial services provider if an alternative provider was behaving in a particularly ethical way. This would increase to 60% if the individual felt their current provider was behaving unethically.
The key issue however is how do consumers recognise good business behaviour? The kite mark is one of the recommendations on the basis that fear of losing the mark would result in a self-regulating internal culture of positive business behaviours. (This is very similar to the findings from research conducted by the CII see blog 20th November about companies attaining the Ethisphere Most Ethical Company award). This obviously requires companies to recognise that poor business behaviours result in competitive disadvantage.
The report also suggests if the level of the current deposit insurance scheme was reduced, which currently provides high levels of protection for deposits, consumers would be encouraged to undergo their own "due diligence" of competitors actively moving to lower risk companies ie with better business cultures. This potential consumer switching is undoubtedly what the regulator really wants.
Perhaps the area that could really make a difference is in linking the good culture kite mark with the capital requirements and the cost of funding for these companies so that the attainment and any subsequent loss of the mark hits the companies in a way that they currently relate to and understand. This, in addition to Katie Evan's recommendations, could surely make a real difference to consumers?
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