In 2018, the FCA published DP18/2: Transforming culture in financial services, to encourage discussions on culture. In it, academics, industry leaders, international regulators and change practitioners share their experiences and best practice insights, and ask further questions of the industry.
The FCA has told us they’d welcome a response from our industry to DP18/2, and we’ve set about doing that in two key ways:
1. IA Culture Forums – the IA held its second Culture in Investment Management Forum on the 25 September 2019, successfully attracting representation from 78 firms. Megan Butler provided the keynote presentation on the SM&CR and the wider culture landscape from a regulatory perspective, and Latham & Watkins took attendees through the Culture Framework (see below). The Senior Managers & Certification Regime (SM&CR), cultural lessons learnt from other sectors and the changing world of work were all discussed and debated through dynamic and insightful panels.
2. Culture Framework - Third Edition (in partnership with Latham & Watkins) – we have developed a non-prescriptive resource which seeks to help bridge the theory/ practice divide by offering a practical toolkit, informed (amongst other things) by recent insights, trends and real-life case studies – from which firms can draw, informing their own approach to culture change. The Framework can be accessed here.
Culture and governance are at the heart of regulation and inextricably intertwined. And extending SM&CR is a concrete and practical example of how this is expected to work in firms. The regime is as much about changing culture as it is about accountability and certification, as the FCA’s DP18/2 paper notes:
Ahead of the implementation of SM&CR for solo-regulated firms, we’ve created an ‘expert’ page on the regime for members. It will act as a staging post for current issues, a depositary for IA documents, and a signpost for useful resources produced by others. We’re also planning several briefings and training courses leading up to the 9 December implementation date, all of which you can find on our expert page.
Due to the impact and influence of culture on the way an organisation operates and interacts with consumers, it also underpins much of the wider work the IA does including:
The FCA’s definition – ‘the habitual behaviours and mindsets that characterise an organisation’
Recognising that it is not possible to assess mindsets and behaviours directly, they have identified four key drivers of behaviour which firms can identify and manage:
Resources
DP18/2: Transforming culture in financial services
Inside FCA Podcast: Interview with Jonathan Davidson and Jayne-Anne Gadhia on Culture and SM&CR
Leadership and management capabilities expert page>
Psychological safety expert page
The Transforming Culture Conference summary
Senior Managers & Certification Regime expert page
CultureSprint
A FCA CultureSprint is an event bringing together a range of experts from multi-disciplinary perspectives to work together in teams, exploring ideas and developing implementable solutions.
Upcoming CultureSprint – Incentives and recognition: driving healthy cultures through incentives and recognition (23 September 2019 – 24 September 2019)
Speeches
Class, cliques and social codes: doing more on diversity - Speech by Christopher Woolard
Transforming culture in financial services - Speech by Andrew Bailey
Realising the benefits of purposeful leadership - Speech by Jonathan Davidson
Culture and conduct – extending the accountability regime - Speech by Jonathan Davidson
Culture in financial institutions: it’s everywhere and nowhere - Speech by Andrew Bailey
Getting culture and conduct right – the role of the regulator - Speech by Jonathan Davidson
The importance of diversity - Speech by Andrew Bailey
Opening up and speaking out: diversity in financial services and the challenge to be met- Speech by Christopher Woolard
