Culture

What is FSA doing about culture and what should firms do to prepare themselves?

“We need to change ....the culture and attitudes..... of the management of major financial firms.”

“It is crucial that we improve behaviours and judgements . To do this we must address the role that culture and ethics play in shaping these”

“Control culture......will include the integrity and ethical values of staff, the participation of directors in board meetings and sub-committees and management’s operating style and philosophy”

“I would particularly encourage boards to have a structured process for reviewing their firm’s culture, identifying its drivers, and the behaviours and outcomes it delivers”

“Regulators should recognise culture as a legitimate area of intervention”

“A poor culture at a firm often manifests itself in failures of governance or management – and in response to such failings, we have taken, and will continue to take, tough action.”

These are all quotes from speeches in 2010 by Hector Sants, the CEO of the Financial Services Authority and CEO designate of the new Prudential Regulatory Authority

The FSA will be developing further its thinking on culture and the regulator’s role. Culture, governance and management has been a part of the ARROW risk assessment framework model since 2006, clearly it is coming under the Regulator’s close scrutiny.

IFAct believes one of the ways of establishing a positive relationship with the FSA is to be proactive in dealing with matters of regulatory interest. Don’t wait for the FSA to impose this on you but grasp the positive opportunities.

It is likely that your team have developed a TCF plan and management information (m.i.) is received at Board level. Now is a good time to capitalise on that m.i. and develop a compliant and profitable culture which is where we can help. There are commercial benefits as well as softer advantageous elements for ensuring the culture you hope exists in your firm does actually exist. A compliant, “can do” culture will go towards meeting the FSA’s expectations; the opposite could be damaging your reputation and expensive.

Consider the following questions and if we can assist you please do contact us on 08456 121211 or e mail This e-mail address is being protected from spambots. You need JavaScript enabled to view it for a without obligation, free, confidential conversation.

• What is the culture the board and management want to create?
• Is there a shared understanding of this at a senior level? Is the view of what the company’s culture should be shared by the Sales director, the Finance director and the Compliance director – or would they each articulate different ones?
• Has a culture that the firm wishes to have, been described and communicated?
• What is management doing to create, inform, encourage and reward the required cultural behaviours?
• Do the firm’s personnel understand and could they describe what the desired culture is?
• Has the culture of the business been measured in any way and is there evidence of actions being taken to improve or indeed change the culture, where variances have been identified?