Bankers 'should swear Hippocratic-style oath to make them behave'
Nathalie Thomas and Eddie Barnes - Scotsman - 04 February 2010
Bankers should be forced to swear
a financial "Hippocratic oath"
to
repair the sector's battered reputation, according to one of Scotland's
top finance experts.The financial sector should pledge to treat clients "as I would wish to be treated" and not to chase profits that "will knowingly harm others", Angus Tulloch, a leading fund manager told MSPs yesterday. Mr Tulloch said the move would tackle a "glaring absence of ethics" currently plaguing the financial industry.
He argued it would be more effective and less damaging than government plans to enact reform through regulation.
The fund manager, who is joint managing partner at First State Investments, is one of the leading Scots-born finance experts and was speaking to MSPs yesterday as part of their inquiry into Scotland's banking sector.
In a wide-ranging paper which he submitted along with his colleague David Gait, Mr Tulloch said the aftermath of the recent financial crisis should be the trigger for a fundamental change of values in the way that financial services were delivered.
He said the sector was marred by the "extreme short-term outlook" of investors and companies.
He added: "As a result, the financial sector has become almost completely detached from the real world.
"At least three-quarters of the $3 trillion worth of currency trades undertaken each day are unrelated to the buying and selling of goods and services – that is the 'real' economy."
Mr Tulloch went on: "The second reason why the financial industry stands for so little is more fundamental.
"There is a glaring absence of ethics within the industry."
Mr Tulloch said a "Hippocratic oath", to be made by everyone working in the sector, would help to "reprofessionalise" the service.
| I hereby swear … I will treat my clients at all times as I would wish to be treated. I will not allow the pursuit of personal gain to cloud my fiduciary role. I will strive to achieve, through hard work, sober analysis and sound judgment, the best risk-adjusted return for my clients possible. I will not, however, pursue these returns to the extent that my actions will knowingly harm others. |
The oath would also commit fund managers and traders not to allow "the pursuit of personal gain to cloud my fiduciary role".
It goes on: "I will strive to achieve, through hard work, sober analysis and sound judgment, the best risk adjusted return for my clients possible."
The pledge would also see financial services workers sign up to the promise that "I will treat my clients at all times as I would wish to be treated".
Mr Tulloch told the committee that the financial industry needed to "reprofessionalise … so people behave".
He said: "The problem with regulation, particularly in the retail sector, is the amount of box-ticking that goes on. It is incredible.
"If everyone in the industry had to do a Hippocratic oath – a hard, professional obligation to look at the long term – that will have a much bigger impact in the long term than ticking the right boxes."
Responding to the oath proposal yesterday, Owen Kelly, head of Scottish Financial Enterprise, said: "I agree with the core points, which are that the industry's priorities must be its commitment to customers, the creation of a culture that looks to the long term, and increasing transparency."
See also:
Sharia Finance: The Money that Prays
Greed is back
Nassim Nicholas Taleb
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