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Spring, Regeneration, Fraud & #integritymatters

Posted on April 2, 2013 at 6:25 AM

Has the world started a better place after the Easter break ? Marginally so, perhaps, maybe...at least judging by the quality of 'intent'.

I'm excited to find the #integritymatters on the CISI website - Chartered Institute For Securities & Investment. If you are a would-be broker or trader in the capital markets, you now need to pass an ethics test before you are allowed to sit exams for professional qualifications. You can find a sample on the site.

The point is really not whether it will sift the 'wheat from the chaff' in terms of integrity. The CISI has evolved from the London Stock Exchange, and now has more than 40,000 members in 89 countries. It is taking a small step in setting a marker, and a tone - and that is very good news.

No April Fool's joke, this - yesterday saw the abolition of the FSA, the UK's banking regulator, replaced with the Prudential Regulation Authority and the City's behavioural watchdog, the Financial Conduct Authority.

And there has been more talk about "toning from the top." Just as well. Because a study to be published today by Ernst & Young (story in the FT here, if you have access to FT.com), reveals that regulators have imposed more than £1bn in fines on UK companies and senior managers for fraudulent activity since 2007. I

The E&Y analysis found that financial services companies accounted for almost seven in 10 fines for fraud that watchdogs issued in the period, a total of more than £560m worth of penalties. That's one way for the country to pay for things, but possibly not the best one...

But let's not just beat up financial services - the study also reveals a wide range of industries, and businesses of all sizes, where the regulator has had to step in and impose penalties. 

 Prosecutions for fraud have led to prison sentences ranging from eight months to 10 years, and according to the research, partners and directors received the heaviest punishments.

Any boardrooms that have not discussed this issue need to do so as a matter of urgency. Here's a stark fact they might wish to publicise : the average prison stay of a convicted fraudster – acting individually or on behalf of a company – is about five and-a-half years.


If you've been keeping an eye on this blog, you'll know I am a great fan of ethics - and the intellectual muscle exercise involved in making choices. But let's face it - people need to understand that it's part of good governance and better, sounder businesses.

It only becomes a mug's game when you're in the minority of business which operates with an ethical mindset - and that is what has to change. 


Categories: Governance, Scrutiny, Accountability