Perhaps it’s asking too much to expect a trade association to show ethical leadership. Even so, the gap between what the Financial Services Forum says is happening and what Christine Lagarde, head of the IMF says is going on remains absurd. Speaking for the biggest banks, the Forum declares they are
“continuing to make improvements…while working co-operatively with regulators to ensure the system is strong, more resilient, transparent and able to promote economic growth.”
“strong push back from the financial services industry” trying to delay much needed reforms.
Her acerbic remarks at a recent conference arguing the financial service industry has “not changed fundamentally” is an indictment of the ethical leadership still mainly absent from this important industry. If you are a broker, a banker—employed or freelance—or hedge fund manager, you could be excused for assuming “business as usual” is almost here again. There’s lots of familiar activity happening, and short-termism is alive and well and driving the ship. That some of the biggest firms have been “mired in scandals that violate the most basic ethical norms” as Lagarde puts it, suggests an industry in deep denial. She was echoing a similar claim by archbishop of Canterbury Justin Welby  who last year added the banks in particular had become disconnected from society and it would take a long time for them
“to win back the trust of their customers after a progressive loss of vision as to what banks were for in society”.
In that same years Lord Turner, then just departing from the unlamented Financial Services Authority, blandly announced that banks were “no longer in denial.” If Lagarde’s or the Archbishop’s were lone voices on the side-lines it might be possible for leaders of large financial services to nod knowingly and with relief return to the more interesting job of making themselves rich. The trouble is the Bank of England’s boss Marc Carney, clearly agrees with Lagarde, further turning the screw by warning the existing culture is damaging the “social fabric”. This is the closest someone like Carney gets to saying the industry is tearing apart the society in which it operates. He is too diplomatic to declare this industry “has become a highly destructive force that must be tamed.” But in so many words he too is arguing for more ethical leadership. For many in financial services “ethical leadership” remains an oxymoron. That is, a contradiction in terms. Ethics are fine for philosophers and even blogs, but in the real world ethics are for the birds. How the big boys behave though, in turn defines how many lesser fish operate. Both big and small continue to seek “short term profits over long term prudence”. That some extremely powerful voices are finally being heard about the ethics and morals of an entire industry must be welcomed. It shows a form of ethical leadership—setting the tone—that can definitely have an impact.