The Archbishop of Westminster clashed with a top City regulator by
saying that, as part of the attempt to introduce more ethical business
practices, rules "become a lazy proxy for morality".Archbishop Vincent Nichols was delivering the keynote address last night in the first of a three-part series at St Paul's Cathedral entitled "The City and the Common Good: What kind of City do we want?"
He gave his talk, on the subject of "Good People", before a panel that comprised Tracey McDermott, Director of Enforcement and Financial Crime at the Financial Conduct Authority, human rights lawyer Baroness Helena Kennedy, and Anglican Bishop Peter Selby, who is a member of the St Paul's Institute that is hosting the three-part lecture series.
Archbishop Nichols said: "Of course law and regulation matter, but they are not sufficient. New rules usually deal with the last problem, not the next one. A compliance mentality typically creates perverse incentives and increasing bureaucracy. Rules become a lazy proxy for morality: people think if it's not against some rule then it's okay. Such a society is inherently fragile."
He went on: "What is required, beyond even ethical standards of conduct, is a fundamental transformation of purpose, so that business, and the financial sector in particular, is seen by everyone as it should be, which is at the service of the rest of society. A change of language or of mission statements is not enough, and the risk of the language changing without credible reform is real. I am not surprised that commentators such as [LSE economics professor] John Kay say that it will take another financial crisis before the City really wakes up to the scale of reform that is needed."
Ms McDermott rejected the archbishop's view, saying rules were crucial for society when ethical behaviour was not followed.
Last autumn Archbishop Nichols hosted a conference for business leaders on business and social responsibility.