Could The Recent NatWest Headlines Have Been Avoided with Better Communications? 

Natwest

By Alastair McCapra

The recent NatWest headlines are a prime example of why the financial services sector cannot afford to ignore the importance of good communications. The independent review by Travers Smith found that Coutts’ decision to close Nigel Farage’s account was in line with industry standards, but that there were deficiencies in how it communicated that closure. As we know, these deficiencies created a space which was quickly filled with a hostile campaign that left the NatWest Group reeling and saw the departure of its CEO Alison Rose.  

Even if Coutts’ customer letters had been written differently, it is not certain that these events could have been avoided, but there can be little doubt that the communications management of the crisis was not optimal. Ironically, one of the reasons Coutts decided to debank Nigel Farage was that it identified him as an alleged reputational risk to the bank. Having decided this, you might expect that Coutts would want to carefully manage that risk down; instead, it fell right into it.   

Risky business 

For retail banks, the risk of activists mounting a campaign against you for one reason or another will always be high, but when dealing with high net worth and high-profile individuals, that risk is much higher. There are certainly better ways of handling these risks than Coutts did. Some disasters can’t be avoided, but many can – or, at least, their effects can be minimised. This understanding is central to risk management approaches for pretty much everything except reputation – here, it is still common to find the assumption that reputation management is something you do after a crisis has erupted, rather than what you do to prevent it in the first place.   

Foreseeing potential crises and acting to reduce their probability and impact is what senior public relations professionals do. Public relations is often seen as the eyes and ears of an organisation. Reputational risk management demands that ability to focus on the perspectives of stakeholders, whether internal or external. By elevating this external view to the highest levels of governance, organisations are better placed to consider reputational risk strategically alongside other critical factors.  

Not tomorrow’s concern, but yesterday’s urgency 

Public relations professionals are indispensable partners, and no longer a distress purchase. They are trained to assess risk through the public lens, to manage relationships with journalists, and to understand cause and effect. They spend considerable time and effort on understanding current and future risk. PR experts with these skills are of significant value to a corporate, and not tomorrow’s concern but yesterday’s urgency. An ill-judged comment to a journalist can go viral in seconds. Ignoring a complaint could lead to a full-scale campaign. An internal memo can soon become front page news. Preparedness becomes crucial in managing issues before they evolve and when they do, a prompt and well-thought-out response can make all the difference. 

In an age of rolling, twenty-four-hour news and social media, businesses without a senior, public relations or communications figure are playing reputational roulette. While reputational risk is acknowledged on most organisational risk registers, the infrastructure to manage it often lags behind that for financial, regulatory, or operational risks. Recent research by the CIPR found that just three FTSE 100 companies have a dedicated communications director. 

A boardroom issue 

Having the right expertise in the building but without a seat at the table is often where businesses fall short when it comes to their corporate affairs teams. Our research found that almost half of FTSE 100 firms – some of the most scrutinised in the world – lack public relations experience on their boards, although the banking sector was not amongst them. This hasn’t, however, stopped banks from finding themselves in the midst of criticism over the last year.   

The argument for well trained, qualified, public relations staff at the top table is over. The case for the introduction of a chief communications officer, someone that resides over all aspects of corporate communications from strategy, brand, leadership and employee communications, public affairs, and reputation management, has never been stronger. 

Intangible assets, notably reputation, play a substantial role in the contemporary business landscape. OceanTomo, an intellectual property merchant bank, estimates that in the 2020’s over 90% of the assets of the world’s largest companies are intangible. Despite the pivotal role reputation plays, the responsibility for safeguarding and enhancing it does not consistently secure a place at businesses’ highest decision-making tables.  

Failing to act in a timely fashion can carry serious long-term costs for a bank. Reflecting on the aftermath of the 2008 financial crash, former RBS CEO, Ross McEwan, candidly noted, “I think the reputation piece will take another five to ten years – and that’s what it is when your reputation gets tarnished so badly.” Even as RBS was on the path to financial recovery, McEwan recognised a lingering trust deficit among customers. No bank CEO can shrug that risk off or leave their reputation to chance.

 

About the Author

Alastair McCapraAlastair McCapra is Chief Executive of the Chartered Institute of Public Relations (CIPR), the Royal Chartered professional body for public relations practitioners in the UK and overseas. In today’s competitive climate, where reputation can be a company’s greatest asset, Alastair’s work with the CIPR seeks to highlight the importance of good public relations and professional development. 

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.