Salz Review - Wall Street Journal

More documents

Recommendations

Info

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.
Salz Review An Independent Review of Barclays’ Business Practices 158 fear of reprisal”. This is not isolated to the investment bank – as our own staff survey showed. Recommendation 30: Issue escalation Barclays should foster a culture where employees feel that escalating issues is safe and valued. Barclays should maintain robust arrangements for raising concerns (whistleblowing) which are perceived to protect those raising them and to lead to actions being taken to address the underlying culture and values issues. There should be regular reports to the Board which are detailed enough for the Board to form insights as to the culture and behaviours within the organisation. Learning from Experience 12.42 We enquired as to whether Barclays’ risk culture encouraged learning from experience. Following the LIBOR event, Barclays initiated a review of all of its business activity involving benchmark rates or indices. Lessons learned studies were also conducted after other loss events, such as the credit losses in Spain and a major trading limit breach. However, it is not evident that they were carried out consistently, promptly or following the same approach. Recommendation 31: Learning from mistakes Barclays should maintain effective processes for learning from its mistakes. It should endeavour to understand and address underlying root causes of issues so as to be able to apply lessons learned more broadly. Investigations should be carried out following a consistent Group-wide methodology. Risk Disclosures 12.43 Barclays has significantly enhanced its risk disclosure in its annual reports since the financial crisis. This is an important part of the bank’s communication with stakeholders. Industry practice on audit and risk disclosures are also evolving to ensure they provide transparency into risks and audit issues raised. Recent examples of new disclosure standards which should be considered by Barclays include the Enhancing the Risk Disclosures of Banks report by the Financial Stability Board’s Enhanced Disclosure Task Force and consultation papers on Audit Disclosures by the Financial Reporting Council.
Page 1:
0 Salz Review An Independent Review
Page 4 and 5:
Salz Review An Independent Review o
Page 6 and 7:
Page 8 and 9:
Page 10 and 11:
Page 12 and 13:
Page 14 and 15:
Page 16 and 17:
11 Salz Review An Independent Revie
Page 18 and 19:
Page 20 and 21:
Page 22 and 23:
Page 24 and 25:
Page 26 and 27:
Page 28 and 29:
Page 30 and 31:
Page 32 and 33:
Page 34 and 35:
Page 36 and 37:
Page 38 and 39:
Page 40 and 41:
2012 167 1993 1994 1995 1996 1997 1
Page 42 and 43:
Page 44 and 45:
Page 46 and 47:
Page 48 and 49:
Page 50 and 51:
Page 52 and 53:
Page 54 and 55:
Page 56 and 57:
Page 58 and 59:
2002 2003 2004 2005 2006 2007 2008
Page 60 and 61:
Page 62 and 63:
Page 64 and 65:
Page 66 and 67:
Page 68 and 69:
Page 70 and 71:
Page 72 and 73:
Page 74 and 75:
Page 76 and 77:
Page 78 and 79:
Page 80 and 81:
Page 82 and 83:
Page 84 and 85:
Page 86 and 87:
Page 88 and 89:
Page 90 and 91:
Page 92 and 93:
Page 94 and 95:
Page 96 and 97:
Page 98 and 99:
Page 100 and 101:
Page 102 and 103:
Page 104 and 105:
Page 106 and 107:
101 Salz Review An Independent Revi
Page 108 and 109:
Page 110 and 111:
Page 112 and 113: 107 Salz Review An Independent Revi
Page 212 and 213:
Page 214 and 215:
Page 216 and 217:
1993 1994 1995 1996 1997 1998 1999
Page 218 and 219:
1993 1994 1995 1996 1997 1998 1999
Page 220 and 221:
1993 1994 1995 1996 1997 1998 1999
Page 222 and 223:
Page 224 and 225:
Page 226 and 227:
Page 228 and 229:
Page 230 and 231:
Page 232 and 233:
Page 234 and 235:
Page 236 and 237:
Page 238 and 239:
Page 240 and 241:
Page 244:
Salz Review - April 2013
show all

Salz Review - Wall Street Journal

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?