The Financial Conduct Authority (FCA) has today published a discussion paper on transforming culture in financial services which presents views from academics and industry thought leaders. The paper is intended to provide a basis for stimulating further debate on transforming culture in the sector.
The paper is a set of essays that discuss what a good culture might look like, the role of regulation and regulators, how firms might go beyond incentives, and how to change behaviour for the better.
Culture and governance is a priority for the FCA and we have a strong focus on the role of the individual as well as the firm. The FCA has considered the role of leaders, incentives and capabilities, and governance of decision making. The introduction of the Senior Managers and Certification Regime (SM&CR) is an example of this; it sets minimum standards for the behaviour of financial services staff and aims to promote a culture where Senior Managers take responsibility for identifying where harm might occur and take action to prevent it. The SM&CR creates a formal link between the behaviour of individuals and the conduct of the firm.
Jonathan Davidson, FCA Executive Director of Supervision- Retail and Authorisations, said “Culture may not be easily measurable but it is manageable. So firms can and should take responsibility for ensuring their culture is healthy for both their employees and customers, which can complement and support their business strategy. We as a regulator have long gone beyond having the mindset that simply complying with rules is enough. However, we don’t believe a one size fits all culture is the right way to go. So we want to promote a discussion and consensus on the essential features of a healthy culture and how firms, regulators, employees and customers can help deliver that culture.”
The FCA would like all those with an interest in financial services to consider the issues in the paper and to engage in the debate about what constitutes a healthy culture, and how to promote it.