| Link(s): | Culture is contagious | FCA |
Context
The FCA has published a speech delivered by Emily Shepperd, FCA Chief Operating Officer, at the 10th Annual Culture and Conduct in Financial Services Summit. Picking up a similar theme to the Portfolio letter sent this week to the Payments sector, Shepperd highlights failings in culture and governance.
Shepperd states that when the FCA investigate failures of consumer protection or market conduct, it finds time and again that the same root cause is a failing of some kind in firms’ culture and governance. Likening culture to a winter bug or a cough or cold, Shepperd makes the point that culture can also move quickly from person to person, meeting to meeting, and decision to decision.
Key points to note and next actions
The speech highlights the following topics:
- Culture drives conduct and decision-making, which directly impact outcomes for consumers, markets, and the economy. For this reason, culture will continue to be a regulatory concern.
- It is vital that the informed, responsible risk-taking required for long-term economic growth is built on a strong foundation of healthy firm cultures.
- Why culture matters: conduct, confidence and resilience – making the point that culture and conduct shape decisions and actions at every level.
- Healthy culture for healthy growth: growth does not come from standing still. It will involve taking on greater risk; asking questions, making decisive trade-offs, taking action. The risk-taking required for long-term growth will be reliant on a foundation of healthy firm cultures.
- Toxic culture: turning a blind eye to toxic behaviours raises serious questions about a firm’s wider decision-making and risk management.
- The ripple effect of culture: herd immunity or viral outbreak? Healthy firm cultures are contagious too.
- The FCA is actively working with stakeholders to drive up culture and conduct standards.