An investor advocacy group in Britain says that policymakers must force cultural change in financial services firms by legislating that they put customers’ interests first.

Ahead of a parliamentary debate on an amendment to new financial services legislation that would impose a duty on the industry to act honestly, fairly and professionally in the best interests of consumers, the UK Financial Services Consumer Panel (FSCP) said that it has gained bipartisan support for the measure. And it called on the government to support the amendment, which it says would increase consumer rights by pushing a cultural change in the financial services sector.

The panel said it has long argued that “the defective culture of financial services organizations” is at the root of mis-selling by the industry. And, it pointed to the recently revealed Libor scandal as evidence of firms’ willingness to put their own interests above those of their customers.

“Yet again we find ourselves debating another financial services scandal caused by the defective culture of financial services providers. Historically, financial services providers such as bank managers could be trusted to act in the best interests of consumers. We need to instill a new philosophy in our major banks and financial institutions of honest, fair and professional behaviour towards customers. This needs to be embraced throughout these organisations and in particular at the highest levels,” said Adam Phillips, chair of the FSCP.

“At their core, recent scandals such as interest rate swap mis-selling have the pursuit of profit with a complete disregard for the interests of customers. The incentive to bend the rules and to make a profit at the expense of the client needs to be removed. This must extend to examining the dubious reward structures which have been found to incentivize mis-selling,” he added. “Only tough action to change the culture of firms will result in more ethical behaviour.”

Investor advocates in Canada, including the Canadian Foundation for Advancement of Investor Rights (FAIR Canada) and the Ontario Securities Commission’s Investor Advisory Panel (IAP) have called for similar change in Canada, either to legislate a fiduciary standard, or to require firms to put customer interests first.