Ask your bank if the boss is qualified?

Peopleschampion.com boss Jim Spowart encourages FSA action on qualifications for UK’s top banking bosses.

When you buy beef you like to know it has been prepared by a proper butcher. And when you go to the doctor you expect them to have bona fide medical qualifications. So what’s so different about our banks and building societies? Surely we should expect those people who look after our money to have people at the top who have the right qualifications for the job.

That’s what the Financial Services Authority is expected to find out over the next few weeks in the wake of the Northern Rock crisis. And it is long overdue.

When the former Chief Executive of Northern Rock, was in front of the Treasury committee he was asked a simple question, was he qualified as a banker? He replied: "I am not a qualified banker" . That’s pretty startling, isn’t it?

Now while Sir Callum McCarthy said that the Northern Rock’s board of directors met the FSA’s criteria for competence – and that the risk committee was chaired by an extremely experienced banker - the main decision maker, who ran the organisation, was not qualified as a banker.

The Treasury committee, chaired by John McFall, has picked out something that definitely needs attention. And once again Mr McFall, the Labour MP for West Dunbartonshire, and his 13 colleagues have been making senior bankers and financial regulators squirm with their probing questions.

“We are concerned that the Chief Executive of Northern Rock was not a qualified banker, although of course he has significant experience. The Financial Services Authority should not have allowed nor ever again allow the two appointments of a Chairman and a Chief Executive to a ‘high-impact’ financial institution where both candidates lack relevant financial qualifications,” said the committee in its conclusion.

The committee says that an absence of banking or accounting qualification should be a cause for concern. It has now asked the FSA to undertake an urgent review of the current qualifications of senior directors in financial firms (especially of those firms deemed to be ‘high-impact’ where there is more risk and exposure to money markets) and ensure that the people at the top have proper knowledge and qualifications. The FSA have until June to check out all the bankers’ CVs. On my view, that must exclude honorary qualifications handed out just because people sit on a board. It must mean real hard-graft examinations passes.

Hoorah for this initiative! It is about time that UK banking returned to looking after its customers properly. There is much more to banking than notching up sales and the banking industry, as a whole, has dropped its standards over the past few years. Once a young banker had exams over a period of five years and learned about the whole industry. Proper qualifications are the very substance of any profession, and they help ensure a safer system.

In Scotland, the Chartered Institute of Bankers has been pressing its Chartered Banking qualification – which should have the same clout as a legal or accountancy qualification. In England and Wales we also need the banking authorities to ensure that people have the proper qualifications. And let’s be clear here that a post-graduate MBA might help your career path – but it doesn’t mean you have the proper qualifications to run a large-scale, sophisticated modern bank. Let’s ensure that in future all our top people are properly qualified to run the bank – and able to look after our money.

Jim Spowart is chairman of Peopleschampion.com, a price comparison site based in Edinburgh. He is also a fully qualified banker and former Chief Executive of three UK banks.