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BSA 2015: Financial firms are like North Korea

Sarah Davidson

May 22, 2015

Steare, who is a professor at Cass Business School in London, said financial companies should function like progressive police forces focusing on community policing and education, while employees within such organisations should have a voice.

He said: “I am worried really that we are moving away from a police service with a separation of the judiciary and the executive to the formation of a totalitarian police state.

“Unless we get the balance right in the way that we make decisions we are going to have perverse consequences for the financial services sector and to wider society.”

Steare seemed to point the finger at regulators like the Financial Conduct Authority and the Prudential Regulatory Authority for creating a culture of fear.

He said: “If you have a rulebook that is printed two metres high there is no way you can understand it.

“Do we want a regulator who is going to send in a SWAT team with severe penalties for those who don’t comply with the senior management regime?”

He added: “In most transnational corporations guess which is the principal driver of decision making? Fear.

“Fear is a really useful mechanism for us as human beings as animals because it helps us to survive in a hostile environment, but it’s there to be switched on and off very rapidly.

“If you are in a constant state of fear those hormones that help us to survive in a high threat environment turn toxic, so we have a high threat fear-driven regulatory environment in financial services.”

Continuing with the North Korean comparison, he said that half of its population are starving and its economy is failing, meaning such a structure of governance is doomed to fail.

He added: “In our private lives we do the most amazing things. We raise children, we look after friends and we make really tough decisions based on our humanity and yet when we come to work in this totalitarian state things change and that’s where things go wrong.

“Unless we get the balance right in the way that we make decisions we are going to have perverse consequences for the financial services sector.”


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