Responsible capitalism: the view from the City
I’m sure that many listeners of a recent Radio 4 Analysis episode, in which an interviewee asserted that “to try and create zones which are morally free in human affairs is a mistake”, would have found cause to nod along in agreement.
I’m equally sure that the interviewee’s next claim – that this mistake “is something that is being recognised now in the sphere of finance; in the sphere of business” – would have been met with some scepticism.
Stroll across the quieter parts of west central London at 9pm, as I do many nights, and you will see not only lines of Eastern European and African migrant workers queuing for a handout from a mobile foodbank, but hundreds of office staff sitting behind the plate glass windows of restaurants on Kingsway, consuming moules frites and speciality Belgian beers.
Over in Liverpool Street, still richer bankers, lawyers, asset managers and trust beneficiaries enjoy maple syrup and confit duck waffles, in surroundings the detail and very existence of which remain simultaneously invisible and yet deeply felt by people outside.
So nothing has changed? So far, nothing has changed. And yet Archbishop Nichols’ claim that something is being recognised is true.
I work in an organisation that provides, amongst other things, tax advice to large companies and wealthy individuals. Every few weeks in the autumn we hold a seminar that collects together members of different groups within the financial industry, and offer our thoughts on legal and commercial developments that we feel might be relevant.
Usually these are focused intensely on the adjustments businesses need to make to adapt to a new rule or a change in the market in which these workers operate. The atmosphere is that of professional coaching, where a new material for the racket or the net, a new player on the circuit, or months of rain or drought mean that players need to discuss and refine their style.
And yet recently, speakers have been addressing a little more than the legal and commercial. In one recent session, the press coverage given to Starbucks, Google, Amazon and Facebook’s tax avoidance measures was raised. Instead of searching for the best jurisdictions and structures with which to minimise tax liabilities, the speaker suggested, companies may in future wish to consider the reputational risks associated with being seen not pay for the services that provide the conditions for making a profit.
Some would argue that this is merely a change in the market environment (consumers becoming more concerned about the distribution of revenue) or an effective change in the rules (government pushing public bodies to enforce previously unattended legislation).
Indeed, in offices all over the City, the increasingly intrusive, unsympathetic (even, at times, counterproductive) behaviour of the banking regulator and the tax authority is making meetings of senior staff more feverish and uncertain. The Financial Services Authority, for example, published a report this month on the relationship between asset managers and their customers. It notes, among other things, that “most of the firms we visited applied limited thinking to how accepting gifts and entertainment could compromise their duty to act in their customers’ best interests”. In other words, the firms are taking potentially legitimate business contacts to eat duck and waffles, rather than pizza, using their customers’ money.
But interestingly the authority adds: “Many firms set their policies simply by reference to market practices. We saw examples of entertainment taken by firms’ staff that, if fully disclosed to the firms’ customers, might have caused concern about the objectivity of decisions taken on their behalf.”
Legal regulation of a prescriptive kind is often not the answer. It tends to absolve people of the need to make moral choices, and instead present them with a game in which doing the wrong thing becomes a challenge.
But notwithstanding mistakes, the new environment part formed by regulation is not one in which simply avoiding notoriety is enough. We are beginning to talk – whether implicitly or explicitly – not just about what we can get away with, but what others will make of our behaviour when called to judgement.
Not “is this alright?”, but “is this right?”
As yet, the response of most individuals working in the City has been that of recovering addicts. We sweat, rant and lapse. We see those delivering a message of change as oppressive tyrants. We wonder how to get our next fix without anyone noticing.
But it is my hope that, as the waffles are withdrawn, and the language of restraint and personal responsibility becomes more familiar, we will come to own it and to rediscover our purpose as professionals who serve society as well as ourselves. The sceptic in me wonders whether this will only last a few years. The addict hopes it will last a lifetime.