Being cynical is easy, of course. But it is hard to be otherwise when reading the new year announcement that the banks are to set up a new banking standards authority aiming, as Minister for Finance Paschal Donohoe put it, "to start the process of rebuilding trust and confidence in the industry".
The new authority will be funded by the banks, though it will operate independently. The announcement is full of the awful jargon which surrounds this area, promising the “highest ethical business standards” along with “a continuous improvement culture” and a few obligatory mentions of “best practice”.
A charitable comment would be that this process is starting from a pretty low base. And that it might have been better to kick it off a few years earlier, after it became clear that we were going to have to bail out the banks to the tune of some €64 billion. The horse has not only bolted at this stage, but was having a lie-down after a few laps of the racecourse.
Now, in the wake of the uncovering of the tracker scandal, it is difficult for the banks to have any credibility in coming over all cuddly about their culture, while they still owe people hundreds of millions after an industry-wide scheme of shameless overcharging.
In the public mind, banks will be judged by their dealings with customers; it is hard to conclude that the establishment of this new quango is anything more than a “look over there, we’re doing something” distraction.
The new authority, due to be up and running by the end of the year, will be based on the UK's banking standards board , which came into operation in April 2015 and says it "promotes high standards of behaviour and competence across the UK banking industry". It was established in the wake of the £290 million fine imposed on Barclays for rigging the key London interbank interest rate in 2012.
Like its UK counterpart, the Irish body will have no regulatory functions and will not represent the industry. You would have to think that in a crowded field which already includes the various arms of the Central Bank, the professional bodies, the Banking Payments Federation, which is the representative body, and the Financial Services Ombudsman, the new authority will have to have sharp elbows to find a role for itself.
Culture surveys
The UK authority has spent its first couple of years undertaking culture surveys and workshops within the banks, feeding back where it feels improvement is needed, working with other professional and regulatory bodies and starting to issue best-practice statements for the sector. No doubt it does some good work.
And perhaps its Irish equivalent may find some useful areas to operate in, though it strikes me that do so it will need to be led by a couple of people from outside the industry who take some pleasure in being bloody awkward, both in public and in private. The likelihood is that the banks will co-operate with the new body, nod politely, turn up at seminars, but that nothing much will change as a result. And culture within an organisation can be the hardest thing of all to change.
Business history throws us regular example of companies which had endemic problems – transport company Uber is a recent example. Often the debate is about whether a few "rotten apples" are to blame, or whether the entire corporate culture is flawed. The idea of a pervasive cultural failure across a big organisation, with a widespread impact on its interactions with customers, can be hard to understand. Yet how else do you explain the tracker scandal, where there was a systematic move across the industry which involved either conning people out of their rights, or interpreting contracts in a way that favoured the banks?
And how do you explain the cack-handed denials of the clean-up, which still have the Central Bank tearing its hair out with some of the lenders, while others appear to have only undergone a late conversion in recent months? There appears to be an enduring sense of entitlement in the Irish banking sector which even the bailout did not shake.
The banks are now going to end up paying money to pretty much everyone affected, even some who have relatively weak cases. They are going to have to go the extra mile, and then a few more. That is the price of their delay, obfuscation and, in some cases, lies in dealing with this. Tough. And remember that so far nobody has lost their job over the tracker scandal, no bank board has been removed and while the Central Bank has liaised with the Garda, there is no sign of any imminent criminal action.
Remember, too, that the Minister for Finance has asked the Central Bank to report to him on the issue of culture within the banks, which it has committed to do by June.
A similar culture study by the Financial Conduct Authority in the UK was dropped after the Banking Standards Board was set up there. Could it be that the banks here are trying to pre-empt the Central Bank report and provide evidence that "something" was being done to address the culture question?
Millions of words have been written about culture in businesses. But you need to start off with the simple things, like not ripping off your customers.
This doesn’t need a standards authority, seminars on best practice or a new code. It requires clear direction from bank boards and senior executives and proper regulation. Shuffling off the problem to yet another new body is not a quick-fix solution.
Senior people have to take responsibility – that is the only way that culture changes.