Communicators key in re-building social contract says John McFall at lunch-time meeting on 10 November 2009
Report by Adrian Russell
Communicators have a key role to play in persuading their boards to publicly address governance issues, and so help re-build public trust in the finance industry, said John McFall at the November CIPR Corporate and Financial Group meeting.
Leading a lively debate with a typically forthright delivery, McFall said that the social contract between lenders and the public had been broken by the credit crunch and recession. All financial services providers, but especially partially nationalised banks and investment banks, had to find ways to address the anger that the public feels about “too big to fail”, excessive risk taking and inappropriate incentive payments.
Defending the taxpayers' £1 trillion support of the UK financial services industry, McFall noted that a high number of his constituents questioned why it was necessary for the taxpayers to bail out banks when in particular there were local projects which they considered worthy of investment. McFall told them that financial services are “like blood in the body” – so central to the running of the economy that it was right to intervene and prevent systemic failure.
What financial services providers need to do now is stick their heads above the parapet and openly engage with stakeholders on the issues of safety, trust and confidence. Over the next three-four years the industry needs to demonstrate how it will change its financial architecture to manage these issues, be of service to the wider economy, and re-build the social contract with the public.
Communicators have a crucial role in pushing this agenda internally to senior management and to the market. Those who are successful will be able to demonstrate sustainable governance and effective risk controls are embedded in their organisations. Failure to do so will result in harsher legislation and loss of business, said McFall.
Responding to questions from the floor about bonuses and competition, McFall said that banks needed to recognise that taxpayers had delivered for the banks, and that banks now needed to deliver for taxpayers. Greater competition would ensure better choice for consumers and help prevent future concentration of risk, said McFall.
Adrian Russell is a senior communications professional with extensive experience in corporate, financial, crisis and change communications alongside proactive, brand building public relations programmes.