Royal Bank rules, 1819

In the second decade of the 19th century the Royal Bank of Scotland faced problems. Its board stood accused of being run by a select Edinburgh clique who unfairly favoured a handful of powerful people and their friends. Meanwhile its Glasgow manager, one of its most trusted officials, had been caught committing serious fraud, costing the bank tens of thousands of pounds and an unknowable sum in damaged credibility. This document was born of that time. It set out to improve governance and restore public trust in the bank and its officers. It was regularly reprinted, circulated and read out in full to the board of directors for the next century.

In some ways, the rules covered the same ground as the bank's charter, which had already defined much of its share ownership and board structure. But this document is much more plain, practical and focused on day-to-day business. It sets out in clear English how the bank will make sure that its assets are kept safe; that its officers are honest; that its board supervises properly; and that branches are appropriately managed. It dictates rules for granting loans, to make sure that directors cannot bypass proper process in their own interests, and to guarantee that all loans are ‘transacted in the best and safest manner for the bank, avoiding all manner of partiality with the borrowers.'

The really important thing about these rules was not so much that they were laid down, but that they were printed and circulated, accessible to anyone with an interest in the bank and its operation. If the bank's only intention had been to improve procedures, it could have chosen to record the rules in private books. Instead, it published them, thereby making an open admission that things had gone wrong, and that the bank needed to do better in future. Publishing them invited the outside world to hold the bank to account, and to judge it in future by clear, measurable standards. It was an important step towards rebuilding some of the trust that had been lost.