February 16 2018
Oxfam is only the latest institution to find that good intentions are not enough to make it immune from disgraceful behaviour or a culture which sees such behaviour as the norm or something which cannot be challenged.
On Radio 4’s The World at One on 13 February an interviewee said this about the aid sector: “There is a pack mentality….. The majority don’t want to encourage this sort of behaviour but do nothing because they are afraid of being seen as not being part of that male society, they don’t want to be ostracised. It’s not about grassing on your mate. It is about upholding the law”.
It could have been said about finance, Hollywood, Parliament, football or churches.
It is all too common in scandals – wherever they occur – to find that:-
- There were warning signs about an individual which were ignored.
- Due diligence was ineffective, cursory or non-existent when hiring decisions were made. See here.
- Concerns that others had were ignored or rationalised away
- People were dazzled by by a person’s reputation and/or money-making skills (sometimes more apparent than real)
- Whistleblowers were ignored or felt unsupported or were told that this was how things were
- Whatever initial investigation was carried out was too limited and nothing much was done as a result
- Leadership was inadequate
- When matters become public a response is given, usually focusing on procedures, which is wholly inadequate to how the allegations are perceived by key stakeholders.
- The entity becomes defensive and lashes out at its critics. Click here for an example.
A combination of some or all these factors combine to make a serious situation much worse than it need be. The embattled entity no longer dictates the narrative but becomes its subject.
There are many lessons to be learned. But one above all: thorough timely investigations matter.
GETTING AWAY WITH IT
January 19 2018
“The Financial Conduct Authority (FCA) has prosecuted eight cases of insider trading in the past five years and secured 12 convictions.”
It is all the more important for firms to establish and reinforce – continuously – the right culture themselves rather than rely on wrongdoers being caught by others. Markets and market participants we can trust are key to the reputation of the financial sector.
ALL CHANGE AT THE FCA?
January 5 2018
The new Chair of the FCA, Charles Randell, is a critical and very welcome appointment. There will, of course, be much for him to deal with when he takes up his appointment. One thing for him to ponder is the somewhat depressing fact that the level of misconduct among firms was the same in 2015 as in 2009, at the height of the financial crisis. Perhaps this is because more such misconduct is being discovered and punished; perhaps more people are speaking up about the misconduct they witness. Still one would have hoped that some lessons had been learnt by now. And if not now, when?