Having written with David Kershaw about Lehman Brothers and the need for public interest obligations of lawyers, specially transactional lawyers to be strengthened; as well as about concerns surrounding Standard Chartered bank (£), I was particularly interested to see this speech from Sharon Bowles MEP, a Lib Dem and Chair of the European Parliament’s Economic and Monetary Affairs Committee (also a former Patents Attorney and Trade Marks Agent). The key section follows:
It seems to me that integrity is also connected to complexity. Complexity can be used to hide lack of integrity, and complex sets of rules also push towards gaming the rules, and probably not a thought as to whether or not that is victimless. That reinforces the points I have made on society and ethics and
All the rules that we are making have the objective of keeping banking and investment stable for the general good. Rules are complex because modern banking is complex – even more complex that it needs to be – and because we are on a treadmill of trying to draw a precise line between the proper and improper for the sake of ‘legal clarity’ which really means opening the door to legal arbitrage – or gaming.
My ideal world would have far simpler rules, far harsher enalties for transgression, and be able to rely on stronger ethical codes not just in banking but in the professions that surround them – the accountants and lawyers -otherwise they drag one another down.
So in just the same way as there is now long awaited planning for action against aggressive tax planning, there should be action against regulatory avoidance in other financial areas.
Put bluntly as I have before, good banks need good lawyers. Moral banks need moral lawyers, and that morality is not defined solely by words on a page, interpreted purely to yield advantage to a bank against the intended greater good. Many lawyers, even within a bank never mind as outside consultants, see that sole focus on the benefit of the client as precisely their
duty. As with a more general ethical code counteracting ‘dominance’ this needs to be addressed.
My proposal, as I said earlier, is to put a duty of care for the common regulatory good on to banks and their professional representatives, with penalties for circumvention of the ‘pith and marrow’ or basic intent of a regulation. I have my plans about where to try this in EU law, but there is nothing to stop the UK from doing it. It is a change of thinking and focus, but
I believe it is central to the restoration of confidence in the integrity of banks, financial services and the City in general.