Can you change a leopard's spots?

10 March 2015


Lord John McFall
Lord John McFall

MCan you change a leopard’s spots

Driving accountability and transparency

Ever since the financial crisis blew up in 2007, as chair of the House of Commons Treasury Select Committee, and subsequently, my relentless focus has been on changing the culture of the banking industry.

Having established The Future of Banking Commission, bringing together all-party parliamentary colleagues, as well as economists, practitioners and civic society representatives, we reported in 2010 that urgent cultural change was needed in the industry. This report has been instrumental in hastening reform, leading to the Vickers Commission and the Parliamentary Commission on Banking Standards.

Today we can see the direct link between these commissions and the Banking Reform Act.

At the time it was crystal clear that, left alone, the banks were incapable of effecting change. Direction and oversight from outside the industry was needed for reform to happen. In addition to new standards and behaviours, competition and diversity, in what is effectively a ‘closed shop’ environment, was urgently needed.

This is where my Parliamentary career and my enthusiasm to join the Atom Board coincided. I am convinced that genuine competition cannot be injected by simply creating one or two new banks out of the embers of the incumbents. Under this model the uniformity of banking services will continue to prevail, since existing banks pursue very similar business models and struggle with legacy issues. Witness the scale and depth of the PPI scandal. Mis-selling of PPI has cost shareholders (for which read you, I and everyone who invests in a pension fund) almost £25billion to date and abused customers’ trust in the activities of a bank.

I believe business model diversity is one of the keys to greater competition. This is where challenger banks like Atom come to the fore. We need businesses with a clean slate, no legacies and a desire to fuel a new style of banking.

In creating Atom, from the outset Anthony Thomson, Mark Mullen and the wider team have been determined to change banking for the better, truly putting the customer first. These are exactly the right sentiments, but just as important, they have the experience behind them that makes them more than up to the task.

However no-one can pretend that the banking industry has rid itself of the consequences of poor culture and unthinking reward systems. In fact the need for the customer to be represented and put into pole position by the banks remains just as great today as it was in 2007 or 2010.

It was therefore a great honour for me to be asked to join the newly created Banking Standards Review Council as Deputy Chair. With industry-wide buy in and leadership from Colette Bowe as Chair and Alison Cottrell as CEO, the Council is tasked with seeing through reforming the banking industry, something that has been at the heart of my life for a decade.

Unfortunately this means that I will have to step down from the Atom Board.

After speaking to those who know me best, and having had long and very supportive conversations with Anthony and Mark, I’ve made the hard decision that taking up the position of Deputy Chair at the Council is a one-off chance that I must take. Given my efforts for over a decade to effect change in the financial services industry the opportunity to help enact industry-wide cultural transformation is an overwhelmingly attractive proposition. In doing so, I am conscious that such change will be a generational task.

A new culture demands individual accountability and recognition that a sustainable company has obligations to society. These values cannot be imported or imposed. They have to emanate from within an organisation. General Robert E Lee, the revered American Civil War figure, declared that an honest man is honest from conviction not policy.

I have witnessed that conviction in the Atom team from the start, and because of this – and the friendships I have already made - I am stepping down from the Atom Board with a heavy heart. I wish everyone at Atom well in maintaining and enhancing this integrity in the coming months and years and ensuring a positive outcome for staff, customers, industry and society.

As I step forward to help change the banking industry from the outside in, I equally believe that Atom can be the vehicle for changing the industry from within.

Image Credit: Tambako The Jaguar