The banking community has been viewed as villains ever since Northern Rock was the first to have the wheels come off in 2007 – nearly five years ago. The Bank of England has also become tainted by the latest scandal and let’s not dwell on the role of regulators and politicians.

A few less mentioned facts on Barclays. Firstly, the $450 million (£290 million) fine: $93 million of this was by the FSA – the rest was US regulators, so let us remember that the bank is in the global cross hairs – not just the UK.

Though the bank has been accused of casino banking and mixing its investment and retail balance sheets, the rate-fixing problem related to the whole of Barclays and its relationship with the wider interbank market. Let’s also remember that with government support, Barclays bought the wreckage of Lehman Brothers in 2008 – so far the biggest bank failure in history.

Barclays chief executive Bob Diamond, his COO and the chairman have resigned but will the removal of the head cure poor behaviour amongst the other 140,000 employees? How do we prevent such things happening again? Judging by the repetitiveness of bank management errors it seems that the lessons are either not being learned or not learned fast enough.

No matter what the failure, be it RBS under Goodwin or Barclays under Diamond, the root cause is the failure of leadership. But how can we say it is leadership when a) Diamond had achieved significant financial results for Barclays and b) it was not him personally that fixed the rates?

It appears that he was an effective leader, he got things done and huge numbers of people were marshalled to achieve good results for the bank. But Diamond is what we call an EBL – an effective but bad leader. We can point to many others in history in this category. Robert Maxwell is a great example. Generally only effective leaders make it to the top but because of narcissism, insecurities or other personal flaws they are often really bad leaders.

Leadership effectiveness skills are well understood, demonstrable and in most cases trainable too. But what defines a ‘good’ rather than an ‘effective’ leader? This is more ephemeral and the problem we have is that generally leaders are only measured on effectiveness and results. How they got the results and the price of what maybe unacceptable or unworthy practice is very rarely evaluated.

For example, some very successful businesses have very high staff turnover. It is a cost that may be ‘blind eyed’ if the results are good, but it is a sign that leadership is not matched by followship and that the leadership is not sustainable.

Bad leaders usually preside over, create or tolerate a bad culture. Tellingly, before Diamond resigned he said that the conduct of the fixers was not in line with ‘the values or culture of Barclays’. This was one of the most significant statements that he made. He was really admitting that the amount of time that the fixing had been going on for it was in fact ‘exactly’ in line with the culture. What is culture? It is ‘the way we do things around here’. Leaders may set the culture by their explicit instruction, tolerance and the sorts of things they reward. In so doing the leaders set the cultural tone.

Good culture in turn is a reflection of good values that are brought to life day after day. It cannot be lip service or an act. It has to be authentic. When Diamond was hired was he hired for his previous achievements or his values?

Clearly we need talent: skills for the business and the softer skills of leadership and the methods of recruitment as directed by boards will have to be expanded to gain far deeper insight into people. This means governing boards must also assess the values and culture that is going to deliver the best results for the business.

The consequences for businesses (the banks customers) will be good. The industry’s cultural change that must follow this debacle means that banks will have to focus far more on customer support and service to stay solvent. Regulation and £80 billion of facilities are already being put in place to provide better for business customers, though the jury is out on how well this will come through to the customers. Nonetheless, there will be a silver lining to the exposure of appalling bank management.

See also: From culture to strong leadership – how to build the perfect team