Launch of test to restore trust in the troubled finance industry

A NEW test being launched publicly today will aim to restore faith in some of the areas of the finance industry which have been worst hit by scandals in recent years.
The London skyline from Canary WharfThe London skyline from Canary Wharf
The London skyline from Canary Wharf

The Chartered Institute for Securities and Investment (CISI) is hoping to give the public a reason to believe in the honesty of firms involved in investment banking, wealth management, corporate finance and mergers and acquisitions, by introducing a new test to measure their ethics.

IntegrityMatters will pose a series of real-life scenarios, asking those sitting the test to say how they would react in each situation.

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Andrew Hall, head of professional standards at the CISI, said: “Currently, the standards in the industry are mandated for retail financial advisers but there are no mandatory qualifications or standards on the wholesale side.

“The reality is that employers on the wholesale side have to demonstrate that their employees are competent and the simplest way of doing that is to make them take an exam.

“The certificate in securities is already taken by many thousands of people. By making the sitting of IntegrityMatters a pre-requisite to taking that exam, it means we’re bringing to the attention of all these people the need for high standards of integrity within their jobs.”

Integrity is something which members of the public have said is lacking in recent years, following on from scandals such as the Libor rigging, which came to light last year.

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A poll by public relations firm Edelman at the end of 2012 found that financial institutions and banks were the least trusted industries and that people in the UK were among those who had the least confidence in their country’s banks, at just 22 per cent.

The only countries performing worse were Spain, at 19 per cent, and Ireland, where only 11 per cent of people said they trusted their country’s banks and financial institutions.

Mr Hall said the CISI hoped the new test would go some way to restoring trust in the financial sector.

“It’s a start to something we’ve been saying for some time needs to be in place: it needs to be a level playing field between those on the retail side and those on the wholesale side,” he said.

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“The Libor scandals took place within what might be described as the wholesale side.

“We moved from a situation 10 or so years ago when everybody in the industry was regulated in one way or another.

“Then for the wholesale side, under the previous regulatory regime the mandatory exam requirements were removed, because it was felt it was unnecessary to supervise people in wholesale.

“Their customers were deemed to be other professionals.”

In the new test, candidates will be required to achieve an A or a B in order to pass, which will be equivalent to a mark of about 70 per cent.

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Although the test will be the first time any professional body has required new entrants to the capital market to prove their integrity, it will be taken by people at their own computers at home or at work, rather than in exam conditions – unless individual firms want to supervise their employees.

However, Mr Hall said the aim was not to produce an exam in the traditional sense of the word, but instead to encourage people working in the financial sector to spend time thinking about possible ethical dilemmas and considering how they would act if faced with such a scenario.

“It’s not a test which will determine whether candidate A is ethical and candidate B is unethical,” he said.

“The reality is that, the way it works, the great majority of people are likely to get an A or a B.

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“If you take it sufficiently seriously, you are unlikely to fail, but we don’t see that as a weakness. It’s not meant to be a judgement on who is or is not ethical – it’s more a question of raising their awareness of the issues.”

So far, firms have generally reacted well to the new test, which has already been taken by more than 7,000 people.

The launch today will see it rolled out further, with a concerted effort to bring it to the attention of the public.

“We see it as the industry making an effort,” said Mr Hall.

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“It’s quite high profile and deliberately so – we want to do something on behalf of the industry to show the public something is being done.

“Cynical people may just say, ‘They would say that,’ and ‘You can’t make people ethical’. One wouldn’t disagree, but a lot of it is getting people to think about those situations.”

The IntegrityMatters test will cost £20 to sit and, if failed, can be re-sat, but it can only be taken twice within six months.

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