Salz Review - Wall Street Journal

157
Salz Review
An Independent Review of Barclays’ Business Practices
impact operational risk and control environment matters have had on performance
ratings, promotion prospects and remuneration.
12.36 Induction and professional development training programmes certainly existed –
including some mandatory compliance training across roles and businesses.
However, feedback from interviewees on their effectiveness was mixed.
Issue Escalation
12.37 Barclays has designed a comprehensive framework for escalating risk and control
issues, monitoring the progress of remediation plans and closing resolved issues.
These issues are discussed at the G&CCs. While some interviewees have praised
these committees as effective tools to improve the control environment, others have
criticised the level of real debate and challenge.
12.38 It appears that Barclays can be effective at addressing issues once they are identified.
For example, in the FSA final notice for failing to segregate client money in the
investment bank, the FSA notes that the issue was resolved promptly. 245 But many
interviewees cited a tendency to resolve issues narrowly by “fixing them” rather than
by addressing the root cause or applying the learning from one experience more
broadly across the Group.
12.39 Organisations need to have other safety valves for staff to report potential problems.
Barclays has a whistleblowing policy, called ‘Raising Concerns’ 246 and recently
initiated an awareness campaign titled ‘Speak up for our reputation’. This reminded
staff of their responsibility to raise concerns. 247 We have not conducted a general
review of whistleblowing, but those matters initiated and raised with us during the
Review were addressed appropriately.
12.40 A culture where staff are reluctant to raise issues can lead to the problems becoming
more difficult to manage. A desire to report solutions rather than problems is
understandable, but for some critical issues it is imperative that relevant senior
management are notified as quickly as possible. Our review of various limit breaches
suggests that this has not always been the case. After a limit breach in the investment
bank, the most senior business leader was only informed after several days. In that
instance, by the time he was informed, the exposure had been reduced and a plan
was in place to reverse the breach. In that case, we also felt that the decision taken by
management on the relevant employee’s accountability and pay, following a
discussion at the Board Audit Committee, did not sufficiently reinforce the vital
importance of limits.
12.41 There is also evidence from Barclays’ internal Employee Opinion Survey of a cultural
unwillingness to escalate issues. A significant proportion of employees in the
investment bank, for example, said that they were “reluctant to report problems to
management”, and that they did not feel able to “report unethical behaviour without
245 FSA Final Notice Ref: 124431, dated 24 January 2011.
246 The number of concerns raised under this policy was 179 in a recent six-month period; see Semi-Annual
Compliance Report to GGCC, March 2012, whistleblowing extract.
247 Updated Whistleblowing policy, dated 21 December 2012.