Banking Standards

Submission from Mr Jan Duijsters (S013)


· Current portrayals of an abysmal UK banking culture, which is both deep-rooted and long-established, are well founded

· Th e culture , allied to lamentable standards of people-management and business-management , not only visited severe impacts on individual members of staff but inevitably contributed to the situation we see today

· Huge rewards for failure are a factor leading to social disintegration

· Creative and radical policy responses are urgently required.

1. Preamble

I refer to the malaise in the UK banking industry and in particular to the issue of an abysmal UK banking culture as currently portrayed in the media. I can assure you as far as I am able from personal experience that this portrayal  appears entirely correct, with the culture being both deep-rooted and long- established .

2. Declaration of interests

I have to declare various interests myself in that I was employed in Barclaycard (a division of Barclays Bank ) from March 1980 to July 2000 at which time I was made compulsorily redundant. Throughout the 1990's until redundancy I was employed in various roles in several departments in Barclaycard Northampton head office, mainly  working on systems and business projects. I am a ‘small shareholder’ in Barclays PLC. I also have a P ayment Protection Insurance mis - selling claim in progress against Barclays Bank .

3. Observed culture with in Barclays Bank Barclaycard Division and some manifestations of that culture

The culture of the 1990's was to firmly divide (separation of those whose were 'in'

– favour with senior management - from those who were 'out' ) and manage by diktat and fear. 

3.1 Brief historical commentary on the culture

This was not, to be fair, apparent during the 1980's - I believe because Barclaycard and Barclays Bank as a whole was then still being run essentially by 'old-bank' management, steeped in the traditional banking culture, most of whom had come up through the ranks often in branch banking  where they would have earned appropriate professional qualifications. By the 1990's many new brooms were coming in to Barclaycard from Head Office and from outside the Bank and indeed from outside the banking industry straight into senior roles (perfectly acceptable up to a point, one has to widen the talent pool and bring in different strands of thinking about the world), but we can guess now that many  must have be come heavily influenced by what is now seen as the Bob Diamond-type of culture. R ational thought, intellectual rigour and logical analysis started to become alien concepts. On those who were known to be  less than impressed with some (not all) of this senior management personally and/or their management style and/or some of their decisions and policies, the pressure was unrelenting. Cronyism was widespread. Several members of management sported extremely fancy job titles but did not have any discernable jobs to go with them , while others had no obvious knowledge of , or even interest in , finance and banking.

3.2 Treatment of (certain) individuals by (certain) senior management, drawing (largely) on personal experience

People who were o ut of favour with senior management were isolated and marginalised, denigrated, bullied and their promotion prospects limited. The examples I give below are of course drawn mainly from personal experience , but some of these measures would have been widely deployed against ‘undesirable’ staff, while other staff may have encountered different forms of pressure. Many decent staff kept quiet with heads down and toed the party line for a quiet life.

3.2.1 Isolat ion and marginalis ation
individuals regularly forced to work alone i.e.without belonging to a team, quite inhibiting as this will lead to less-efficient working and output (as any basic-level management course will prove through contrasting 'go-it-alone' versus 'working together' games) - no-one easily to bat ideas off or ask questions of, hence the staff member is potentially open to criticism for doing a poorer job than 'expected'

- allocated to a desk which faced a blank screen and at one side was also a blank screen i.e. very m uch told to 'sit in the corner', quite inhibiting to productive work as well as demoralising

- allocated no work at all (this was done on occasion to entire sections of staff as well as individuals).

In other words people could be put at a disadvantage by management and then criticised f
or not doing a good-enough job, but where nevertheless a good job was done it simply served t o rile the management even more .

3.2.2 Denigrat ion
 - constantly being
labell ed 'negative' or as having an ‘attitude problem’ ( once very favourite epithet s at Barclaycard), which I feel are generally objectionable
- held to be against the sales-at-all-costs culture and management
- is - always - right culture s, which was true for those few individuals who were ever the one s taking nothing at face value, deconstructing everything, asking awkward questions, offering ‘madcap’ ideas or playing devil’s advocate to stimulate debate, probing whether some activity or other was of real value long-term, etc.- so what I believe are good qualities in business were turned on their head by management and declared irrelevant and counter-productive (even dangerous and subversive)

- being downgraded 'just like that' due to a person’s job role being downgraded by senior management fiat, and when anyone protested of course they were flatly told it shouldn't matter - I can assure you it did - it was felt very personally, to the very core, and of course it meant that  the member of staff per sonally had to make extreme efforts to recover that lost ground and claw the way back to their original grade, all very distracting from ongoing work and of course the management could then hold that against people as well - so a double-whammy and a situation where the individual can't win
- fault-finding was a priority e.g.when presented with a written report 
certain manager s would typically ignore the content, analysis and conclusions and home straight in on trying to locate typographical errors.

3.2.3 Bull ying
- I was once approached by a very senior manager (a 'Head Of', i.e. one grade below Barclaycard Director level) while working alone in a room and asked straight out why I didn't resign (which approach I imagine was
unlawful ). I knew of course that this person found my natural manner of looking at work topics irritating (i.e.the questioning approach no junior was allowed to question) and that I was something of his 'bete noir' for reasons otherwise unknown to me. I later found in ordinary open filing in my department several notes he had written to my then departmental manager calling my status and prospects into question
- arbitrarily being told at no notice that our (i.e.everyone in my department at that time) morning and afternoon 15-minute breaks were abolished, and when I complained via the Trade Union I later found out from other staff that my manager was branding me a [quote] 'ringleader' which I found offensive and was in fact incorrect as I was speaking for myself as opposed to sp
eaking on behalf of any group ; this ridiculous episode proves that it is not at all easy, comfortable or straightforward to be a whistle-blower even over such a minor matter
- allocation of
totally pointless tasks

- constantly having to not only adjust to but also learn and parrot the latest 'fad', a personal 'favourite' was 'Quality First' (an American import) involving  ten 'training' sessions and a casebound textbook which was heavier and no doubt much more costly than my A-Level Economics textbook. The thrust of the material is self-evident , but it does contradict one of the most basic business propositions that the success of any business acti on may be analysed in terms of the ‘Time-Cost-Quality triangle’ Another fad which springs to mind was the 'Barclaycard House' which purported to explain the 'values' which  held up the ‘pillars’ of Barclaycard. These diversions were just insults to the intelligence, time-wasting, money-wasting and simply crass.

3.2.4 Promotion prospects limited or totally withheld

- being told to take a job vacancy for a (fairly routine and 'easy') job which the member of staff had actually done years before, i.e. no career progression on offer, in fact just an open attempt at forcing the person to go backwards,  a blatant demoralisation tactic

- the periodic general threat of redundancy (Barclaycard-wide) deployed - this occurred at least twice in the 1990's and only served to ramp up the c limate of fear and suppression.  Add to this the constant upheaval of departmental reorganisations as a means of disorientating the staff.

3.3 Limits to challenging senior management

It can be asked why people such as myself didn't do much more to contest the situation during their employment . This is simple to answer, in my case. As an ordinary working person with no significant personal assets I had not only a job but a  mortgage and a wife and family with two daughters (one of whom has a lifelong disability - autism - and requires a huge degree of attention and support) so sticking my neck out too far, I judged, could well result (bearing in mind the above sorry litany of management abuses and perversity) in someone concocti ng a pretext to have me sacked. We are only left to ponder about w hat some areas of this country's business community  had come to even then .

4 . Inevitability of the current situation within banking

This just might give a flavour of one person's view of the culture in just one corner of Barclays – and it is admittedly somewhat dated - but from this I believe anyone can readily imagine that such ill-informed and plainly unreasonable approaches to people-management and business-management grossed-up to Barclays Head Office level and industry-wide level, would have inevitably led to the appalling situation we see today in multiple areas of the banking industry . Indifferent education, questionable motives, want of personal integrity, inability to communicate clearly , and otherwise experienced and reputable staff with long service records being cowed by senior management and rendered ineffective are all factors which must have come into play. It   is not therefore at all surprising that the shameless attempts to rig LIBOR which are now so well known did occur and (apparently) no-one came forward at Barclays to blow the whistle in public during a period of years.  Similar considerations probably lie behind industry-wide failures e.g.the development, marketing and sale of Payment Protection Insurance and over-complex derivatives and securitised products, etc., and illegal trading with embargoed countries.

5 . The huge rewards for failure and their long-term effect on society

We must ask why if someone resigns from their job and particularly if they resign due to failure they are entitled to any special payout, which the ordinary person neither receives nor expects to receive. We need to question w hy it is so startlingly different for the so-called ‘ elite of society . With the amounts originally being bandied about in the tens-of-millions of pounds just for failure (in Mr.Diamond's case – although I understand he subsequently waiv ed a large proportion ) we can soon work out that the ordinary citizen is by this standard of just about no value. The public resent this greatly, and the impact on social cohesion will be corrosive. Just like the tax-avoidance scandals highlighted recently this is all just another staging-post on the dismal road to social disintegration, a complete separation of the elites from the public. Furthermore, if we look at the Barclays share price which peaked at well over £7 and is today under £2 I think on this account as on many others the public is right to ask how this justifies even the current levels of Director and senior management salaries, let alone their prospective bonuses and payoffs.

5.1 Countering the scandal of reward for failure

Although public policy responses are being prepared their effect will probably be less than dramatic certainly in the short term , but it is a start. Maybe more radical measures could be considered, e.g.moving from ‘one share one vote’ to ‘one shareholder one vote’ at corporate AGMs, or legislating for PLC s to arrange for the election of (and funding of) a statutory Shareholders’ Committee as a sort of ‘shadow Board’ with suitable powers to e.g. investigate, restrain, whistle-blow and refer to regulators. Possibly there should be a general power to simply set aside and declare null and void any reward-for-failure clauses in employment contracts, plus the establishment of simple legal frameworks for the recovery of unwarranted bonuses paid in prior years. However, it remains to be seen as to whether the standing of regulation and regulators can be restored and strengthened – the public wonder s whether there can possibly be anything like an equal balance of power between the banking elites and their 'regulators' given the huge disparities in remuneration, the level of the contacts they have around our society, and therefore their perceived status. A t present the banking elites remain well-placed to hold the regulators in contempt.

5.2 Extending the criminal law

Maybe extensions to the criminal law should be contemplated. There is a considerable disparity in personal risk where a petty crim inal may be subject to a custodial sentence while those committing 'high crimes' disadvantaging maybe millions of people possibly worldwide go unchallenged and generally unpunished. F ines  imposed simply  on banks do not harm any individual miscreant. They just affect those left in post clearing up the mess, and the shareholders , most of whom are powerless and could not conceivably have had any prior knowledge or involvement at all in any wrongdoing . If it is a crime to pervert the course of justice, perhaps it should also be a crime to pervert the course of financial dealings.

24 August 2012

Prepared 22nd September 2012