RBS and CFOs

Fred Goodwin losing his knighthood took me back to the Financial Services Authority report into what happened at the Royal Bank of Scotland to nearly kill the bank back in 2008. I couldn't help but feel that now politicians have decided it's their job to punish business people it would be worth checking which other individuals the FSA had damned. They didn't. As far as I can see.

There is an entire chapter on management, leadership and management culture and it seems to oddly hold back from drawing any conclusions except to say that the investigation raised a lot of questions about leadership. Which, must therefore damn everyone.
And then there is this intriguing quote in the FSA report drawn from a report by RBS' own group head of internal audit. This is what he said: "There have been a number of observations made during this review that the Group CEO tends to operate too often in the CFO role and that [the CFO] should be more independent in his decision making’.

It's not entirely clear in which context these observations were made. This could have been day to day, it could be confined to a single event or deal, such as the acquisition of ABN Amro.
That said no CFO would want to be written up in this way.

It raises an interesting debate about just how 'independent' a CFO needs to be to fulfil his duty. After all, a CFO might challenge the CEO for a couple of reasons because 1. he's totally misguided and hasn't got a clue about the dire implications of what he's doing (and CFOs do sometimes think this, especially if lumbered with a dreamy, ideas-man of a CEO), or  2. because being the financial whizz on the board it's his job to challenge the dreamy ideas to make sure they are affordable and will produce a return. Number 1. is exceptional but necessary while 2. is routine, reasonable and also necessary.

There's no contradiction between fulfilling the business aims of your employer and still challenging an idea. There will be times however, when someone will make you feel that way. I suppose ultimately that should make you wonder whether you're in the right job. Or, whether you're CEO is.


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