Radical rethink on banking practice is only way to restore confidence

Never has Irish banking been the subject of such close scrutiny with four inquiries under way into the AIB allegations alone, writes Larry Broderick

The recent revelations that have engulfed banking, when viewed alongside other recent controversies, have generated a lot of comment and justifiable anger about the banking "culture" and the necessity for this to change. The Irish Bank Officials' Association (IBOA) would whole-heartedly agree with this, but believes that first we must share an understanding about what is meant by "banking culture" and what change is desirable and necessary.

IBOA has viewed with alarm the recent imported trends within Irish banking that have created a set of values that we believe are alien to the highest ethical standards and practices traditionally associated with the sector.

Staff have been pressurised into selling an ever-increasing portfolio of products to customers based on profit maximisation. The tradition of a professional and ethical customer service has been replaced by a culture driven by performance-related pay, cost-cutting and a "sell, sell, sell" philosophy. This culture is one of unadulterated greed that puts profit before people - or its two most important stakeholders: staff and customers. This is not acceptable and I believe this unfamiliar work ethic and standard have led directly to scandal after scandal in banking.

The IBOA is not against change in work practices; we embrace change, as long as it also benefits staff and customers. Nor am I arguing for a simplistic back-to-basics within banking, but what is urgently needed is a fundamental evaluation and change at all levels in Irish banking. For successful change, the industry must take the lead and review all aspects of the business at an organisational, structural and practical level.

It is important to remember that Irish banking contributes 4.6 per cent to our GNP and provides tens of thousands of jobs. The contribution that our industry makes to the economy cannot be understated. It is imperative that we work together to restore the credibility and reputation of Irish banking.

This is why IBOA has proposed a forum on banking based on the Partnership model that has been the cornerstone of national economic and social policy for the past 17 years.

For such a forum to have a meaningful impact, it cannot be perceived as a cosy boys' club of senior executives. Instead it must include staff, customers, regulatory bodies, Government and the business interests.

It should draft an industry-wide code of conduct that deals with the general culture within banking as well as relating to the operational and structural side of the business.

In any review of the general culture within banking, we must be prepared to engage in a critical review of the increasing trend towards performance-related pay within the banking industry, its role in the drive towards maximising profits and its detrimental effect on staff and customers.

The current system of flat structures with no controls and an unhealthy obsession about cutting costs to simply increase profits has led to many of the problems outlined recently by IFSRA chief executive Mr Liam O'Reilly.

IBOA wants and is working towards making our industry profitable but it has to be done through best practice and highest ethical standards. Institutions that contribute so much to and benefit from our economic well-being also have a corporate and social responsibility not just to staff and customers but to society as a whole.

It is obvious from recent developments that Ireland's financial institutions need to examine their human resource strategies and address the lack of openness and fear of speaking out that exists within the business. Our experience as the trade union representing staff in the finance sector is that instances of bullying, harassment and stress-related illnesses have dramatically increased.

The industry must face up to these problems and work with all the stakeholders to find solutions. Senior management must actively implement real and meaningful change and not just talk about it. It must take responsibility for what has occurred and be accountable for it.

One way to facilitate positive change would be for bank boards to be truly representative, not just of the corporate and investor interests, but also representative of staff and customers. I have argued previously for the need to have worker directors on the bank boards.

It is my contention that if this was the case, these abuses and practices would have been uncovered years ago and halted. Two of the most significant and important stakeholders in the banking industry are the staff and customers.

IBOA believes it is imperative that customer's voices must be heard and listened to at boardroom level. Banks should, in our view, put in place realistic structures to take on board genuine concerns.

Support and structures should be put in place that ensure there can never be a recurrence of these unethical and illegal practices. Clear and unambiguous ethical standards similar to those applied in the public service should be promoted and adhered to at all levels in the organisations.

It is not acceptable for certain people to say this was all in the past and cannot happen again. Experience over the years has shown this is simply not the case.

Neither is it acceptable for people at the top to hide behind the cover of the various investigations or try to scapegoat junior staff.

Now is the time for the Government to show true leadership and restore national and international confidence in Irish banking.

The general public, bank staff, customers and investors are demanding clear leadership.

It is essential the international reputation of our banks is restored to that of the highest ethical standards and service where staff can work comfortably in a stress-free atmosphere providing the service to our customers that they want, expect and deserve.

Larry Broderick is the general secretary of the Irish Bank Officials Association