Today, the Financial Conduct Authority (FCA) posted a note saying that a former BlackRock Asset Management Managing Director had been deemed unfit for the job (as approved person) due to his repeated failure to purchase a valid travel ticket. These repeated rather minor acts of cheating, if you like, turned out to be conscious decisions, rather than errors and hence proved the intent.
The consequences were drastic – and probably a very effective way of demonstrating the power of applied ethics and law enforcement. The individual in question, Jonathan Paul Burrows, was banned “from performing any function in relation to any regulated activities for not being fit and proper”, so the FCA.
Also today, the New York Times DealB%k reported that the Dutch Banking Association had introduced an oath (with variations, addressing aspects of faith) “I swear that I will endeavor to maintain and promote confidence in the financial sector”. The oath aims to improve the sector’s image and its executives’ behavior – so far only the 90,000 at the top of banks which made headlines with scandals such as Rabobank, ABN Amro or ING Group will be asked to sign the oath, the article states.
While an oath or pledge, as introduced in at least one further bank and common in various other professions such as medical doctors and attorneys, may be seen as a step in the right direction, it clearly is nothing more than one step though. Pledges or oaths need to be considered in context and therefore, an in-depth understanding of the cultural and sub-cultural particulars (i.e. the corporate culture for instance or the values and practices of an industry) need to be considered. Apart from this, power dynamics in organisations play a key role in the success of behavioral change campaigns.
A fragmented approach, imposed by help of a pledge or oath, most likely underpinned by abstract computer-based training in all or some segments of the concerned organisation or industry, and predominantly introduced for public image purposes, however, is highly unlikely to affect the desired change. Ethical behavior can be fostered by help of strong role models, this is obviously at the root of the approach chosen by the Dutch Banking Association. Enforcement and practical application including the replacement of previous (unethical) behavior with new (ethical) behavior is notoriously difficult to implement. It is vital to move from ethics as abstract moral concept to ethics as lived and applied in daily tasks and decision-making though. Ethics need to be tangible, rather than just a textbook subject.
Incentives (for ethical behavior) and disincentives (for unethical) behavior require consideration, so do aspects such as peer pressure. Effective tools for reporting unethical behavior and ostracizing unethical behavior on a broad level, across the interlinked global sector, would require an inter-disciplinary approach. If these more complex elements of human behavioral change remain unconsidered, the strategy may backfire and become perceived as posturing only, as the Adam Smith Institute believes.