What outcome do the Supervisors really want for Banks?

Recent supervision especially for financial services but also in how, for example, Sarbanes Oxley has matured is looking for outcome based results that enable a more individual risk assessment and management program for end users.

As far as Banks are concerned, this drive for outcome based interpretation of compliant performance is taking place in a atmosphere that is focussing on the apparently excessive rewards paid to bankers which encouraged greed and mismanagement of risk – and proved to be decidedly non sustainable.

MIFID, the Retail Distribution Review and tangentally Solvency II and the upcoming Basle 3 are principles based legislation looking for outcomes that are evidencing higher standards of advice and execution, fairness and sustainability – for the customer.

In order to achieve this then  Banks are going to have to return to the days when employees did not move around and when competition between banks for employees generally did not take place – because the principles of the quoted legislation and soon to be enacted legislation are attempting to deal with the products of little intrinsic value that fostered the culture of bigger salaries, bonuses, options, shares, pensions in the first place.

But that is a difficult outcome to achieve and measure..Especially when one is closing the stable door after the horse has bolted.