The financial services industry should be Malta’s economic jewel in the crown. It is giving employment to thousands of people and even if its impact on the real economy is not huge, it still contributes to boost our GDP. But this industry thrives on trust and the way that some of the sector operators as well the regulators are behaving is threatening to destroy this fragile trust.
I am, of course, referring to the way that the MFSA and the BOV senior executives are handling the various cases of mis-selling that have taken place in the last decade. It seems that there are still many in this industry that subscribe to the school of nods and winks when it comes to dealing with abuses of consumers rights. The bank’s management that is more interested in preserving its power base and a regulator that is deeply entangled in a conflict of interest have made a mockery of the commitment to uphold consumers’ rights.
Banks often get involved in scandals. This just shows that most bankers are after all as greedy as many other business operators. Bankers are, after all, not the ‘masters of the universe’ as they like to project themselves. The difference between well regulated banks and those who believe in the school of management ‘by nods and winks’ between regulators and operators is that the former deal with scandals in a way that aims to restore their customers’ trust with an unflinching determination to carve out the rot.
Barclays was one such bank that has had to deal with various scandals of market manipulation, mis-selling of products and assisting in money laundering. The FSA, the British regulators, as well as the Serious Fraud Office immediately took action and conducted speedy investigations. Shareholder pressure forced the Chairman and CEO of the bank to resign and a new team was appointed within a few months of the surfacing of these malpractices. A wind of change blew in the dark corridors of this venerable financial institution and blew away the cobwebs that could be found in every nook and corner of the sanctum sanctorum of this mega bank.
Anthony Jenkins, the newly appointed CEO made a sensible statement that would have been totally unacceptable in the good old days when the bank’s leaders thought that they knew it all. Jenkins is quoted by the Financial Times as saying: ‘Restoring the bank’s reputation is my top priority. Profit targets will have to be trimmed to more realistic levels’. He also indicated that in due course he will have to implement a ‘transformational plan’ that would see many of Barclays top executives replaced.
Yet in Malta the executives involved in the BOV mis-selling scandal are still busy doing what they have always done: preserving their comfort zone against any attempt to let some fresh air percolate in their head office. The well paid MFSA cardinals take a similar stance. They seem to think that consumers’ rights are just a romantic concept that is best left to European Parliament politicians to discuss endlessly.
Were it not for the brave attempts of one or two professional financial services operators like Paul Bonello, the public debate on the BOV mis-selling scandal would never have lasted for more than a week or two. Similarly, very few politicians have stuck their neck out to challenge the bullies that are destroying the reputation of this industry. Those who do speak out against the arrogance of these bullies deserve the respect and support of all ordinary hard working people who go about living their lives honestly and quietly.
More than ever before the winds of change need to blow with some vigour in those corners of the financial services industry that still reek with mouldy odours resulting from years of management by nods and winks practiced by those whose main interest is self preservation built on an incestuous network whose hallmark is unending greed.