Barclays has had some very public legal problems in recent times. Payment protection insurance mis-selling, Libor-fixing fines and claims, and claims arising from the sale of derivatives products to SMEs come to mind.
It is not alone among banks in having these issues – and on one account deserves credit for being the first to reach an agreement with regulators. Unveiling its strategic review, chief executive Antony Jenkins seeks ‘first-mover’ advantage again, claiming that by ceasing some controversial activities, the bank will acquire values that will secure its future. Banks that ‘don’t get’ that shift’s importance, he predicted, ‘will fall behind’.
Most commentators missed the importance he attached to legal and compliance matters in all this. But they are huge. The compliance function, placed with the legal department following another major reorganisation in 2004, has been taken from the general counsel’s remit and placed as a direct report to Jenkins.
Given the admitted control deficit that sits behind some of the bank’s problems, that may reflect a belief that the arrangement was not fit for purpose. But for the lawyer who replaces outgoing GC Mark Harding, this divestment should be liberating.
Regulators have increasingly placed demands on in-house counsel that put them in the position not of trusted adviser, but of a ‘control function’ – an increasingly conflicted extension of the regulator’s staff.Barclays lawyers will not fully shake those responsibilities. But whatever its motive, this move does look helpful.