Let's make the responsibility collective

This is part of a wider socio-legal contribution to research on financial market regulation and policy. Reform of the occupational ‘culture’ of banking is commonly mentioned as being a means of reducing misconduct by bank executives and staff (including market manipulation, e.g., Libor rate fixing). In this short letter to the financial press, the cultural reform agenda is related to an issue of economic justice, namely the debate over clawing back from bank staff some proportion of their past and/or present remuneration, whenever payments are seen a result from rule-breaking, recklessness or malfeasance. However, according to an un-named bank spokesperson, one impediment to such cost-recovery is that “only a handful of staff are usually to blame”. In response, the present author says that framing the issue in terms of direct and demonstrable blame of a few individuals is self-serving for bank employees, minimising the potential for clawbacks and ensuring that the greatest proportion of the costs of market misbehaviour and regulatory fines continues to be unrecoverable. Instead, we should imagine a form of collective responsibility, meriting collective clawbacks. Not only would that enable higher financial recoveries, also it would transform the occupational culture of the financial services industry, encouraging those working in it to more closely scrutinise and discipline each other. Newspaper publication of these views resulted in an invitation to present evidence to the UK Parliamentary Commission on Banking Standards (final report in mid-2013, see http://www.parliament.uk/bankingstandards).