In the “Oxford Project” article Professor Vines introduced us to the work of the Balliol College Interdisciplinary Institute, which amongst other things is wrestling with the question of “what framework of moral obligations could and should be imposed on employees within financial institutions” if we are to ensure that the financial services industry doesn’t endanger the economies it is supposed to serve?

Professor Vines solution is to propose the professionalisation of the financial services industry, along with considering a new integrity system that would measure and moderate the behaviour of this new professional community through an apparent return to the days of old world banking (or modern medicine) where trust, ethics and integrity apparently prevail.

The trouble with this proposal is that it is exactly right in terms of identifying both the need for a modern reinvention of integrity systems and the need for individuals in positions of trust to act more professionally but that it is entirely wrong (or at least no longer right) in the way that society and regulation allows professions to be negotiated, constructed and regulated.  

The traditional professions (medicine, law and the clergy) and even the latter comers such as accounting arose at a moment in time when the right social circumstances and needs coincided with the right academic and economic arguments for professional closure where expertise became valued  (Perkin, 1989). Taking Accounting as a relatively recent example, Carey (1969) argued that the need for individuals to pay the right amount of income tax and entities to have balanced books were spurred by the introduction of legislation and regulation that required harmonisation in the reporting standards, coincidentally leading to academic capture of the educational tools and the creation of a regulatory incentive to participate.  Notably, it wasn’t the insistence of government that everyone undertaking accounting work become professionals but the creation by government of the right environment (i.e. laws) for individuals to gravitate towards professional recognition if they wanted to claim the prestige and public respect of the people using their services.

Translating this back into a modern financial services context it is difficult to imagine the same ‘encouraging, eco-system’ approach being considered by any government when the apparent preference of wider society is to (justifiably) apply stick rather than carrot, especially when rectifying the ethical failings in financial services, and when the paradigm of government is to seek ‘industry wide’ solutions rather than ‘professional’ solutions.

This is perhaps the central challenge to the future of professions. Once, an individual would pursue the educational, ethical and experience challenges that lead to professionalisation with the reward of expert recognition, respect and economic success. This individual pursuit was predicated on the simple concept of professional ‘exclusion’ that would mean only the brave few will persevere with the process to be invited and entitled to call themselves a ‘professional’. By definition professionalisation is an individual concept designed to differentiate the professional (through expertise, education, ethics and peer recognition from others in the community. The entire engine of consumer trust is also predicated on being able to ‘know’ that the person they are dealing with is ‘different’ from all those who just work in an industry and who are just simply following the law. Being a professional is an active term, it describes not only how much more than the minimum legal requirements were undertaken to achieve that status but that the professional will offer more based on their experience and expertise than someone who is just complying with the minimum requirements of the law. 

However, as identified by Professor Vines, the call from government and society is to ‘fix the financial services industry’ by somehow ‘professionalising’ the entire industry? Governments need certainty and uniformity in the way regulation is applied but professions value ‘norms’ and ‘standards’ that allow difference in their application.  Between the pursuits of difference in ‘process’ and ‘people’, professions are almost antithetical to the modern standardising paradigm of regulation, where rather than work at the level of empowering and obligating a group of individuals to negotiate ‘norms, ethics and behavioural expectations’ that match the views and needs of society, we have increasingly pursued the economic argument that presumes all are welcome as long as they produce the same output (forms or documents).

It is an all too easy (albeit temporarily satisfying) solution to lay the ills of the world at the feet of human (ethical, behavioural, moral) failure, especially when this provides more momentum to reach for stronger regulatory levers. Demand for higher standards, better education and stronger moral fibre are coded in the language of professionalisation but whilst ever the intent is wholesale industry change and whilst ever the goal is to change the behaviour of everyone than we cannot continue to pretend that this is professionalisation. It is just a more ambitious form of regulation.

The tools of professionalisation are the same – education, standards, ethics, law, but its only when they are committed to and applied at the personal level that they translate to the behaviour of ‘a professional’.

So, not only do we need a new and innovative consideration of an integrity system for financial services we need a new way of considering the regulation of the whole through the regulation and acknowledgement of the individual. Until governments and regulators reverse the trend of the last twenty years and begin to encourage and recognise the individual professional, including accepting that this must by definition exclude some participants, and perhaps even override the larger economic arguments of the industry, then we should stop pretending to have a conversation about increasing the professional standards and integrity of the financial services industry.

Regulation at the macro level of industry is useful and necessary but we need to either be truthful about what it is and clearly use the language of control and restriction or regulators should embrace the complexity, uncertainty and exclusionary power of individual professionalism, because then we could genuinely transform the landscape of professional services for real societal benefit.