Banks plan new ethics council to engage with APRA
Australian Financial Review Oct 29 2017 11:00 PM
James Eyers
The major banks and Finsia are in discussions about forming the Professional Banking Council, which would oversee ethical standards for individual bankers and engage on their behalf with the prudential regulator.
The Professional Banking Council will be based on a similar body in Britain, which is overseen by Chartered Banker, a not-for-profit that is working with Finsia to develop the local version.
The council has been endorsed in principle by the big four bank chief executives.
Work is underway in each of the major banks to determine how the board and Finsia's new professional certification program can be integrated with existing learning and development programs.
It understood that Australian Prudential Regulation Authority chairman Wayne Byres also supports the council. One of its key roles will be to work closely with APRA on issues involving ethics and culture.
Australian Bankers' Association chief Anna Bligh and Banking and Finance Oath chairman John Laker are also backing the formation of the council.
Finsia CEO Chris Whitehead would not confirm when the council will be announced or begin operations. But he said "we are getting a good reception and its creation is looking positive".
He described the council as a "connector", to "work with industry and regulators to connect the goals of the regulators with those of institutions, to create standards around conduct and competency".
"Establishing a professional culture in the banks is something everyone supports. Banks and regulators have a common goal of ensuring good customer outcomes," he said.
'They have a right to be heard'
Robert Dickie, the president of the Chartered Banker Institute in the UK, was in Sydney, Melbourne and New Zealand last week to discuss the board with teams from the banks and APRA.
The Chartered Banker Professional Standards Board in the UK was established in 2011 and is chaired by Lady Susan Rice, the former CEO of Lloyds TSB in Scotland.
Mr Dickie said it had been working closely with the UK prudential regulator to "give a voice to the qualified professionals".
"They have a right to be heard and their interests protected. Occasionally that means being in conflict with the desires of shareholders of their employer bank."
About 145,000 bankers in the UK have completed the Chartered Bankers "foundation" program. The program could soon expand to cover insurance, securities and investment industries.
Mr Whitehead said the creation of the Professional Banking Council in Australia will represent a new focus on individual responsibility, which he said is a necessary complement to the regulation of institutions. The council's professional standards will adopt higher standards for conduct than regulatory minimums.
Improving risk culture in the banks is one of APRA's key areas of focus amid a series of banking scandals that have tarnished the industry's image in the eyes of customers and politicians. But Mr Byres said two years ago that regulators can only do so much on culture and ultimately "the financial sector will collectively determine the values it wants to uphold and the behaviours it wants to display".
On conjunction with the new council, Finsia is preparing to launch a new certification program, which will offer a syllabus including ethics, leadership, customer responsibilities, the role of banks in society and the economy, risk management, principles of credit and specialised areas of banking.
Bankers will need to pass exams and assignments and will have to stay up to date in a similar way to lawyers' continuing professional development to maintain their accreditation, which Mr Whitehead said could be used by potential employers as a sign of an individual banker's commitment to act professionally.
It is hoped a new focus on individual accountability will help the banks restore community trust and potentially avoid excessive regulation in the future.