“No, of course, what really matters is the blame”. So sings the Witch from one of Stephen Sondheim’s celebrated musicals, Into the Woods. But perhaps the éminence grise of musical theatre hit upon something: we live in a blame culture. We look feverishly for someone to take responsibility. But there is a fine line between accepting responsibility and casting out for a scapegoat which is fuelled by animus. It’s a delicate line to tread.
In the Global Financial Crisis of 2008, bankers were the bogeymen of blame. Of course there were problems, complex financial instruments that went awry, not enough supervision of ‘shadow banking’ and a general recklessness. Many media outlets used increasingly provocative language to lambast bankers: “Looters in suits”, “Let off the hook again!” “Bonus culture to blame for banking crisis” and one headline generated by an interview with the prime minister who presided over the GFC: “Bankers should have been jailed for role in financial crisis”. Even Blackadder’s Baldrick got in on the act: Tony Robinson lambasted Britain’s banks on Question Time: “It’s almost like they’re not human”, he sneered. Smack the popular piñata and see what spills out.
But if you look at the research conducted by the Financial Times, nearly fifty bankers were sentenced to imprisonment for their role in the GFC. And you really do have to look for it: A cursory Google search of “bankers financial crisis” brings up a litany of results in a similar vein to “how bankers made billions from the 2008 Financial Crisis”.
So how can you move to the next step, take responsibility and emerge with your reputation intact? In the UK, banking risks have changed: off-balance sheet activities are now far more strictly regulated and as of 2018, had shrunk by 40% since 2007. There was also greater focus on what financial services did next: The Banking Act, the division of FCA and PRA, the establishment of the Financial Stability Board are all manifestations of an acceptance of responsibility.
And what about today? We are caught up in arguably the largest crisis in living memory. The problem with a global health pandemic is there are myriad opportunities to apportion blame. Governments were too lax. Too stringent. Contradictory. Shambolic communicators. Prioritising the economy ahead of the wellbeing of others. Or the other members of the public (never you) were too selfish and wanted their moment (quite literally) in the sun.
Of course, a key flashpoint arose when it transpired that Dominic Cummings, Chief Adviser to the Prime Minister, had driven 264 miles to facilitate childcare for his young son. A veteran foreign affairs reporter tweeted: “I’m trying to think of anything, in a lifetime of reporting that has cut through in the way that Dominic Cummings has. Not Iraq…”
But perhaps a reason for the almost universal furore goes beyond what Mr Cummings did and lies more behind what he represents. As one of the architects of Brexit, as an individual who has given controversial statements (“we want to hire weirdos and misfits with odd skills”), Mr Cummings has set himself up as the perfect political punch-bag. Covid-19 has destroyed lives, businesses, livelihoods, caused untold grief, mental strain and fear. The UK government has tried to combat it through emergency legislation and radical economic stimuli. But no action the government has taken would satisfy the need to attribute blame.
After Mr Cumming’s press conference in Downing Street, the Financial Times’ chief UK political commentator tweeted, “If Dominic Cummings had given this talk three days ago most of this furore would have gone away”. Maybe that’s right: Mr Cummings would still have been the target of much public opprobrium but had he addressed the issue at the earliest opportunity, he would have at least quelled some of the more querulous voices.
Finding someone or something to blame is often confused with the legitimate need for public inquiries. Inquiries are by their nature, grave. A quick trot over the past three decades has given us the Scott Inquiry, Hutton Inquiry and Iraq Inquiry. These were all followed keenly by the media and the public. It is likely that the Prime Minister and his administration will have to accept some form of collective responsibility or at least be given the opportunity to accept responsibility for their handling of the coronavirus due to the unpalatably high death toll, enigmatic edicts for certain sectors of the economy such as retail and transport, alongside care homes and an older slice of the population being quietly elided from discussions.
But the government does not have a monopoly on blame. In this crisis, it is insurers, not bankers, who are the villains de jour. Insurance policies are creatures of contract: it all depends upon what the policy actually says. If a pandemic such as Covid-19 was envisaged and drafted into an exclusion clause, then insurers will not have to pay. If they did not, they will. It is simple – and literal – contractual interpretation. Of course, some might point to the San Francisco earthquake of 1906 and note that this ended costing Lloyd’s of London over $50m, equivalent to roughly $1bn in today’s currency. The instruction from a prominent underwriter at the time –notwithstanding the potentially crippling bill – was to “pay all of our policyholders in full, irrespective of the terms of their policies”. Bruce Carnegie-Brown, chairman of Lloyd’s of London, opined recently that the entire industry “could be in jeopardy” if it was forced to pay out claims that it “never intended to cover”. Sentiment can often colour fact. You might- and should – feel compassion for the SME that believes its policy covers a Covid-19 related loss but actually, does not.
But despite heated debate, the insurance industry cannot refund indiscriminately, based on emotion, nor can it become a lightning rod for those baying for its blood.
Perhaps the lessons of other crises have proved salient, particularly for the insurance industry: On 1 May, the FCA announced its intention to obtain a court declaration to resolve contractual uncertainty in business interruption insurance cover. The FCA, born from the crisis of 2008, is taking responsibility as a proactive regulator to provide much needed clarity. And it is no whitewash: as at 1 June the FCA has approached 56 insurers, reviewed over 500 relevant policies and provided a substantive update on the proposed legal action.
So perhaps what really matters is not taking the blame but taking a stand. One reason for Dominic Cummings’ press conference was because of fevered speculation which simply had not been addressed by Mr Cummings. There was a vacuum which could only be filled by a statement from him. Similarly, after the Prime Minister’s much feted “lockdown” speech three weeks ago, the sharper and more forensic leader of the Labour Party lamented that the Prime Minister had failed to provide “clarity and consensus” which not just he, but the nation sought. The glut of regulation after the GFC showed how policymakers sought to provide clarity to a financial sector which had gone off the rails. For some, the blame really does matter: it was your fault. But for others, it’s more than simply saying “mea culpa”: it’s more about how you tackle a crisis or an accusation quickly and effectively. Communications is an integral part of that and something that we as practitioners should always consider when advising clients. Some crises do not allow for this, but for the majority, you need to make your point clearly, succinctly and quickly. Then you need to do something to show that you have listened and understood – whether that is manifested in new legislation, new policy or a change in position. That way you’re far more likely to find your way out of the woods.