14 January 2019
Looking back over 2018, one of the key regulatory themes emphasised throughout was culture.
The year started with what can be best described as another stain upon the reputation of the financial services industry, with the unedifying publicity regarding the Tata Steel pension scheme and the antics of various regulated and unregulated firms resulting in the FCA taking prompt action to implement changes in their rules and guidance to provide a clearer advice framework to reduce customer harm.
In March 2018, the FCA issued a discussion paper DP 18/2 Transforming Culture in Financial Services. The aim of the paper is to better equip firms into fostering a culture which supports the spirit of regulation in preventing harm to consumers and markets. The collection of essays within the paper was a novel approach by the FCA to try and educate firms that culture is not a one size fits all model, nor should it be something committed to paper, or other durable medium which is spoken about at a few meetings and then consigned to a shelf or folder on the PC. Unlike TCF where the FCA outlined the seven criteria to be measured, culture needs to be more personal to the business. The responsibility for embedment lies with the owners, directors and managers of the business, and needs to be brought to life by the same individuals. All staff need, not only to understand the culture but also to accept that that is the way their employer wishes to conduct its business on an ongoing and continuous basis. Perhaps on its own, this would not be enough for all firms to embrace an appropriate culture, however, in a little under 12 months’ time, all FCA -regulated firms will be required to have prepared and delivered the statements of responsibility for their Senior Management functions. They must have also delivered appropriate conduct training to all senior managers and certified staff and made plans to deliver conduct training to all staff during the following year and annually thereafter.
Under the Senior Managers and Certification Regime, the conduct rules will apply to almost all staff in the same way. Speaking at the October 2018 APCC conference the FCA were open in their belief that extending these rules to all staff, placing the obligations to act with integrity and treat customers fairly on them individually will provide a challenge to firms where the culture is inappropriate.
This article first appeared in Money Marketing – https://www.moneymarketing.co.uk/2018-in-review-regulation-rears-its-head-again/