BANKING Part 1 of 3: Accountability and Regulation


by Andrew H. McMorrin (Drew1314) – A retired banker



How did, what is possibly the world’s main financial centre, arrive at this state? {jcomments on}
For me, two words, accountability and regulation! Or rather, lack of it! In my opinion, the two are inextricably linked. In Part Two find out why I think so.

I do not suggest for one minute that we return to the draconian regime of the mid 1960’s which, at times, was truly bizarre and yet, comforting in a perverse way.

Some examples of bizarre practices back then.

We had to submit a sample of our handwriting, until it was deemed acceptable – ledgers were hand-written and had to be legible.

The branch of the Bank I started in, did not even have an adding machine. We borrowed one for the annual balance, not interest rate changes, from a customer of another Bank! It exercised both the brain and the body, as I had to lug it along the main street to the branch.

Suits, white shirts and sensible shoes on weekdays, sports jackets/blazers acceptable on Saturday mornings. “Standards my dear boy, standards” was the cry.

If under 23, one had to apply for “permission to get married”. I was 22 and had to submit details of my wife-to-be’s parents. Name, age, employment etc. I was the son of an engineer/sheet metal worker – my wife’s father had his own business – so that was all O.K. then. (Don’t get me wrong, both my father and my father-in-law were true gentlemen).

Qualifications were a necessity if one wanted promotion, unless of course “Uncle Wull” was high-up in Head Office. Unfortunately, mine wasn’t.

You could be moved at the drop of a hat, even sometimes, a whim, anywhere the Bank had a Branch – Lerwick to London. After over twelve years in one branch, I received several promotions in that branch and was given effectively two days to move from North Ayrshire to near the Solway coast (where I was born). I had a wife and two bairns. It was promotion and I was delighted.

Every night, the “cash” had to be balanced to the penny – that’s the old penny and the ledgers (paper cash), once a week (at least).

These were just a few of the things staff were required to comply with and, by and large we accepted them. There were many more foibles, yet the Bank made good profits and by and large the staff were contented. The buzz words back then were “job satisfaction”.

So where’s the accountability and regulation I mentioned above?

It is by subjugation and discipline that these were maintained in all areas within the bank.

A more visible example was, once a year at least and unannounced, several “inspectors” would arrive on a Monday as the doors closed. God help you if they were closed a minute early or late!

Immediately on entering they took “control or joint control” of the cash, just to check no one was “pauchling” the dosh. The degree of control was dependent on the size of the branch. The branch in Ayrshire I worked in, it was said, was so large, it emptied Glasgow Chief Office of “inspectors,” not just to count the cash, but for the following week or two, studying the fine detail of our lending arrangements.

There was always trouble during this analytical phase, which usually surfaced the following week, when the “inspectors” had retreated into their ivory towers. Then the “proverbial” would hit the fan or, in other words, the “Errata” were laid bare. I studied Latin at school and I told them Errata was incorrect; not a career enhancing move on my part. They looked for mistakes, even spelling ones, if they could find no others. A certain type of person was required to be an “inspector”, yet I knew a few as friends, one a very close one. He, in particular, opened my eyes into the Banks vision of accountability. That is what I called “accountability and regulation”.

This inspection was designed to check our conformity to the regulations but also to let us know just how accountable we were and to whom.

Then there was the dreaded Bank of England “inspection”. In all the time I worked in the Bank I knew of only two, in all of the banks in Scotland. I am sure there were more, I probably just did not hear of them. We had one! Boy oh boy, they were thorough. A sort of enema, purging the waste and other nasties in one sharp decisive audit. That is what I called “accountability and regulation”.

One of the most complicated areas was “Exchange Control”. This was an area, I, and many others at branch level, was somewhat perplexed by. Perhaps the reason why all the Banks had their own Foreign Departments (sometimes they too were perplexed and had to defer to the Bank of England for advice). It’s purpose, that all monies, coming in and going out of the Country, were subjected to strict rules. Even anyone going to Costa del Sol was only allowed a limited amount of cash and travellers’ cheques for their holiday. There were no Credit or Debit cards back then.

There were ways around the rules, e.g. a waiter from the local restaurant, would, every few months (a different waiter each time), arrive, always accompanied by a couple of heavies and a couple of thousand in fivers (We had often wondered why there was a lack of fivers in their pay-ins). The money was always destined to the same City in the far east, the same Bank, the same branch, and, oh yes, the same account. I reported the pattern, as required in the undernoted manual, to our Foreign Department. They were all at sea, as I had quoted from that dreaded tome, which every branch, of every Bank in the Country, had a copy “The Exchange Control Manual”. That is what I called “accountability and regulation”.

Once a year, your manager (line boss nowadays) would interview you and tell you of all your faults. I had some particularly useless bosses and a few top drawer ones, one even marked me down for wearing inappropriate footwear; “brown slip-ons” with a seam up the front. It was only once and was a Saturday morning. I kid you, not!

As you progressed “up the ladder” it was less about the shoes and more about your competence. I was in charge of “advance control” and at one branch one manager was so pernickety he scalded me for countersigning a loan for a “stud” moggy; for £100 it was, I remember it well. It turned out that the cat had only one testicle and would not breed. I had advised the customer not to pay the loan until legal matters were sorted out. I was “stuffed” for being honest. Maybe the moggy should have been as well. That is what I called “accountability and regulation”.

So why was the last example “a cat loan” relevant?

Well that was the point at which “faceless wonders” (invariably Uncle Wull’s nephews) and so-called “whiz kids” in Head Offices of Banks, not just my Bank, were lending billions to third-world countries, with not a hope in hell of getting even the interest back. The slippery slope by then was well started and the division of my bank into two different beasts had started.