Where would you place financial services in your list of “industries I both love and trust”? Let’s be clear: such a glowing reputation has been desperately elusive for the sector in recent years.
Yet the rather unsnappily-titled Retail Distribution Review (RDR) – now entering the lexicon because UK financial advisers will behave differently with their customers in terms of advice and the way they charge from the start of next year – has been designed to protect (and help transform the financial sector’s wretched reputation with) the public.
But studying to comply with the RDR – as FT columnist and former broker, Merryn Somerset Web – is doing, can have the perhaps unintended side-effect of revealing more unsavoury facts about financial services.
In her most recent column she describes her course of study as “a depressing experience…charting the dismal record of greed, fear, corruption, incompetence and ignorance that is much of our financial industry.” Strong words from someone who continues to make her living in the arena.
And yet among the array of pernicious financial products on the market including derivatives and a tax avoidance product called a single premium life assurance bond, Somerset Webb has seen something which…say it quietly…offers “hope”: a new fund called the Battle Against Cancer Investment Trust (Bacit) doesn’t come with charges, offers an annual charitable contribution of one per cent plus a fund manager “stumping up for a percentage of the expenses”.
A cynic, or maybe a realist, would – as the writer acknowledges – “dismiss the whole thing as PR”. But she’s not so quick to do so, suggesting this new financial fund has something different at its heart than fleecing investors.
And so, even in places not normally associated with philanthropic behaviour, there may be surprises. But rather than being merely a sop to CSR, such moves can make commercial sense too. Analysts are increasingly looking at investment targets influenced by sound Environment, Social and Governance factors.
Rebuilding the reputation of a company is difficult enough, never mind that of an entire industry sector. Examples such as the Bacit provide a hopeful hint that the will exists in the sector to balance the unbridled making of money with doing the right thing. Demonstrating commitment to a higher purpose than profit alone is what the best corporate reputations are made of.