The FCAs Director of Supervision – Retail and Authorisations, Jonathan Davidson delivered a speech at the 2nd Annual Culture and Conduct Forum for the Financial Services Industry – here are some highlights:-

The culture of regulated firms has always been core to the FCAs regulation of their conduct although Mr Davidson reiterated that the FCA will not dictate the culture that firms should have, instead the regulator expects to see firms across the industry placing greater emphasis on doing the right thing for consumers and markets, over all other business objectives.

The FCAs close supervision of firms has allowed the regulator to build up a number of examples of positive culture and the steps senior managers have taken to shape the culture of their firms and has spotted four main “tools” leaders can use to shape and drive culture.

1. Leading from the front, which applies not only to the Board and senior managers, but leaders at all levels of an organisation.
2. The formal structures around remuneration, HR and recruitment help to build a workforce that is aligned to the desired culture.
3. The narrative the firm provides employees around its aims and strategies is also a key indicator and the FCA has found that those narratives that resonate the most with employees are those that are the most accurate and interesting.
4. The capabilities of an organisation play a significant role in shaping its culture. Changing a firm’s culture requires firms to acquire new capabilities. These four areas are all individually important, but it is when they are controlled consistently that cultural change becomes successful.

While individual firm engagement is important, the FCA sees the Senior Managers Regime as a vital part of its strategic approach to culture as it’s the embodiment of the regulators work on introducing greater levels of individual accountability.

It will be those firms that embrace the FCAs work on culture as an opportunity, rather than a box-ticking exercise, that will reap the wider business benefits.

You can read the full draft text of Jonathan Davidson’s speech here. http://bit.ly/2abdtRE