One focus for the truth commission could be to explore what we now mean by ‘professionalism’ in the sectors of banking, financial services, law, and management consultancy.
There is a case to be made that all four sectors have lost any true sense of professional responsibility. Other less compromised professions now need to take on the challenge of helping these sectors to rediscover what professionalism is about.
‘Professional standards’ have been defined as ‘the skill, competence, or character expected of a member of a highly trained profession’.
Bankers, lawyers and management consultants still lay claim to such standards. Every one of their corporate websites will tell you so. When JPMorgan Chase were charged in 2010 with fraud linked to the sale of derivatives to Italian municipalities, their response was that their employees ‘had acted with the highest degree of professionalism and entirely appropriately.”
But as we have seen from the explanations given to Congress, the Securities and Exchange Commission, and our own Treasury Select Committee, this version of ‘professionalism’ is very different from that exercised by scientists, surgeons, engineers, or airline pilots. To be a ‘professional’ in the world of finance means to exploit every opportunity, every regulatory loophole, every under-informed client, in order to gain financial advantage for the firm (and consequently oneself): and then to go on to create new ways of doing more of the same, through ‘financial innovation’.
The fact that this modus operandi has spread across other professions, to auditors who will sign off accounts known to be unsound, and to lawyers who will provide legal opinions designed to circumvent the law, is doubly disturbing. Public faith that professionals can be trusted to act with responsibility and according to agreed standards, is fast disappearing.
It is partly the failure of the ‘unworldly professions’ to understand what was happening in banking and finance that allowed excesses to get out of hand. How many well-educated professionals in the UK were aware, a few years back, that it had become standard for investment banks to apply 30-50% of the company’s profits to self-awarded bonus pools? How could such a practice, unprecedented in the history of shareholder capitalism, have been allowed to take hold?
Hence one of the reasons why the truth commission, asking bankers to explain themselves to their professional peers, is being proposed.