Working Group on Responsible Innovation in Finance [2011-2012]

The Working Group on Responsible Innovation in Finance is a standing network of the Observatory for Responsible Innovation. It assembles a core group of participants with various backgrounds and expertise (banking industry, regulation, management sciences, economics and sociology), and a wider network of interlocutors, discussants and informants.

The Working Group has been holding a series of discussions on responsibility and irresponsibility in financial innovation since July 2010. The central mission of the Working Group is to elaborate a practical view for the development of responsibility at the core of financial innovation, especially in the case of complex financial products and services developed in investment and corporate banking. One of the main objectives of the Working Group is to tackle the organizational instances in which financial innovation is handled in investment banks, with a strong focus on New Product Committees (or New Product Approval). The Working Group explores means to formalize these instances, make them more responsible, more accountable and more open to public scrutiny.

Discussion Paper (November 2011): "Towards a practical approach to responsible innovation in finance: New Product Committees revisited"
Abstract: This paper examines the potentials of New Product Committees (i.e. New Product Approval) inside investment banks as organizational sites for the development of responsible innovation in finance. The manifold interpretations of the notion of responsibility are first briefly discussed. The functioning of New Product Committees in the financial services industry is then presented in detail. The features of New Product Committees are finally appraised in the light of the different interpretations of the notion of responsibility. The paper concludes with a series of policy implications and recommendations. This paper serves as background material for the Working Group's work in progress and should be followed by a more precise policy proposal.

An improved version of the paper appeared in the Journal of Financial Regulation and Compliance (2012, vol. 20, iss. 2, pp. 147-168). See also a short executive summary in LSE's Risk & Regulation Magazine (Summer 2012, iss. 23, pp. 18-19).