My oath, say bankers

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From Banking Day comes this gem:

Six of Australia’s most powerful executives have formed a company to improve ethical conduct at local banks and fund managers.

The Banking and Finance Oath Limited (BFO), incorporated last month, will oversee and enforce a voluntary oath of conduct to be sworn by professionals employed across the Australian financial services industry.

…This is the oath:

“Trust is the foundation of my profession
I will serve all interests in good faith
I will compete with honour
I will pursue my ends with ethical restraint
I will create a sustainable future
I will help create a more just society
I will speak out against wrongdoing and support others who do the same
I will accept responsibility for my actions
My word is my bond.”

…Members can be censured, suspended or expelled by the directors if a “Committee of Review” finds that they have broken the oath or harmed the reputation of the banking and finance industry.

However, Dunne said, the policing functions of the new body would be limited and it would be more focused on providing education and support for people employed in the industry who were confronted with an ethical dilemma or who felt a duty to become whistleblowers.

Bravo! Acknowledging that there is a problem is half the battle. But is that what this is? Here what the founder, AMP Capital Investors Stephen Dunne, reckons:

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“The idea of developing an oath for bankers and other financial services professionals came from the observations out of the global financial crisis that new regulation was not the only way to rebuild public trust in the industry,” he said.

Fair enough and we do need a shift in banking culture. But I can’t help observing that it was industry self-regulation that ruined banking by leading it to put its profits ahead of everyone else’s. And where’s the oath that matters most:

“I will not make private profits based upon public risk”.

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Expecting the folks who create money to not keep it for themselves if given the chance is naive. Rules create culture, not the other way around. There’s no substitute for strong supervision and high capital requirements.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.