G in ESG: FCA to examine firms' governance to improve culture
The culture of financial services firms is often depicted in movies, and perceived by some of the public, as either
- ‘Dull and Jurassic or
- Reckless and scandalous.
Senior managers need to do more to improve the culture at their firms so the depiction and perception of financial services can improve, the FCA’s chief operating officer has said.
Emily Shepperd, who is also the regulator’s director of authorisations, spoke to members of the financial services industry at the City and Financial Global’s 8th Annual Culture and Conduct Forum
She said that
- The culture of financial services firms is often depicted in movies, and perceived by some of the public, as either ‘dull and Jurassic or reckless and scandalous.’
- The FCA is looking closely at firms’ governance, and that senior managers need to get the culture right to improve the image of financial services in the UK and abroad.
- ‘We are looking closely at what support firms offer to employees to improve their culture so that it boosts the conduct of their business or function,’
- ‘The FCA expects senior leaders to nurture healthy cultures in the firms they lead. Cultures that are purposeful.
- That have sound controls and good governance. Where employees feel psychologically safe to speak up and challenge.
- Where remuneration does not encourage irresponsible behaviour that can ultimately damage the business and wider markets.
- ‘Our role as a regulator is to lead by example and we do care about culture as it informs conduct and that is what we regulate.’
Shepperd said that
- The FCA’s incoming consumer duty rules will help firms improve their culture.
The rules, first published in July, will bring in an outcomes-focused approach to regulation.
They will require firms – advisers and fund/product providers – to ensure the products and services they offer represent value for money and are understood by consumers.
The consumer duty comes into force next June for advisers and platforms, and in mid-2024 for closed-book products.
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