Culture and conduct are key
15th July 2016
Culture and conduct have been two of the most hotly debated terms in the financial services industry during the last few years. It is no longer sufficient merely to comply with the rules. The FCA now expects firms to take responsibility for establishing an ethical culture that entrenches good conduct throughout the firm, from top to bottom, together with effective conduct risk management systems.
In its Business Plan 2015/16, the FCA announced that it would conduct a new thematic review on whether culture change programmes are driving the right behaviours, with a particular focus on remuneration, appraisal and promotion decisions of middle management, as well as how concerns are reported and acted on. The onus is on regulated firms to prove that their conduct risk frameworks and control systems actually work in practice.
In its 2016-17 Business Plan the FCA states that culture remains a “central focus” of its work, as poor culture and poor conduct are inextricably linked to poor consumer outcomes. The FCA states that it will continue “to demand high standards of conduct” backed by Supervisory or Enforcement action as needed.
Do you know how your clients and your peers would describe the culture in your firm, and is it what you want it to be? Time taken to find out and then to regularly monitor it will pay dividends in having a better-managed firm focused on the areas that drive positive behaviours and outcomes.