“While not a substitute for effective regulation, the Culture Board has an important role to play in challenging industry” – Director General Derville Rowland

• Launch of Culture Board a welcome initiative in building consumer focused culture in retail banks.
• Need for change is clear. There is much to be done to restore trust and improve governance, culture and standards across the system.
• The Central Bank will closely monitor and challenge the banks on the delivery of their Behaviour and Culture plans.

Speaking today at the launch of the Irish Banking Culture Board, the Central Bank of Ireland’s Director General Financial Conduct, Derville Rowland, acknowledged the launch of the Culture Board as a welcome step on the road towards building a consumer focused culture in retail banking.

She said: “I welcome the establishment of the Culture Board with its intended focus on behaviour, ethics and culture and its proposed advocacy for the interests of bank customers and a sustainable banking industry. While not a substitute for effective regulation, assertive supervision and robust enforcement, the Culture Board has an important role to play in challenging industry on these key issues.”

In 2018, the Central Bank assessed the behaviour and culture of the Irish retail banks, on foot of the unacceptable tracker mortgage-related failings that caused detriment to consumers. The Behaviour and Culture Report found that while all five banks had taken steps to reinforce the consideration of the consumer interest, some banks were more advanced than others and all had a distance to travel. That remains the case, following the action plans submitted by the banks in response to the report.

“I would like to be able to tell you that all the banks addressed the questions we raised and that they passed that test with flying colours. But in reality, it was a mixed picture. While some plans were better than others, only one bank submitted a truly considered, comprehensive plan. We have given the banks our feedback. Now they must take it on board and address those shortcomings”, she added.

As the Behaviour and Culture Report (PDF 756.85KB) noted, culture is a matter for each individual bank in the first instance, and it is globally recognised that regulators cannot prescribe culture for individual firms. However, regulators monitor, assess and influence culture within firms in order to guard against conduct risk and drive better outcomes for consumers. In that respect, the Central Bank expects regulated financial services providers to have comprehensive risk management frameworks in place, including conduct and consumer risk frameworks, and to manage these risks effectively.

She continued: “The Central Bank will closely monitor and challenge the banks on the delivery of their Behaviour and Culture plans in the period ahead. While we hope the Culture Board is effective and successful in shaping change, we won’t for one moment relax our requirements of the banking sector and the standards we expect it to meet. The need for change is clear, and there is much to be done to restore trust and improve governance, culture and standards across the system.

“I very much hope that today marks the beginning a new era of banking culture in Ireland characterised by high standards of honesty, reliability and integrity. I think it is fair to say that the social licence under which banks operate is conditional on the current generation of bank leaders delivering the promised cultural transformation.”