FCA Culture


There is a widespread perception today that there is – or certainly has been – something profoundly wrong with the culture of the UK financial services sector.

A strong feeling that the FSA failed to recognise and do something about this before the crisis struck was probably one of the reasons for its replacement with twin successor bodies the PRA and the FCA.

The latest insight into shortcomings in financial services corporate culture emerged recently with Lloyds’ £28m fine over an incentive scheme (and implicitly a culture), that encouraged staff to put sales ahead of customers’ best interests.

Culture may seem a somewhat intangible commodity, something that’s much easier to recognise than describe upfront, but culture (and specifically its role in promoting fairness) is one of the key things the FCA is now looking at.

“Only through establishing the right culture,” a recent FCA publication stressed, “can senior management convert good intentions into fair outcomes for consumers and ensure their sustainable delivery.”

At a recent gathering of our trainers, we brainstormed how culture manifests itself within the insurance firms for whom we deliver training.

In a 2007 paper, the FSA identified six general drivers of culture under the headings: Leadership, Strategy, Decision making, Controls, Recruitment, Training and competence, and Reward. For each, it offered a range of positive and negative indicators. The FCA will no doubt be adopting this, as they have the FSA’s suggested Management Information of fair treatment of customers

This has a parallel in McKinsey’s Culture Web, which takes indicators of culture from an organisation’s Myths and stories, Control systems, Rituals and routines, Power structures, Symbols and Management style. The Culture Web paints a more vivid picture, to those outside and especially inside.

Unsurprisingly, many of our trainers’ observations concerned Management style or Leadership, and in particular whether managers appeared to support or undermine the value of training.

On the positive side there was the senior manager who sat in on a workshop to learn more about life on the coalface. Less so another who sat in but spent the entire time on their Blackberry. Similarly, there was the CEO who moved his meeting from the boardroom to avoid disturbing a training session, another senior manager who kept pulling people out of sessions to attend to other tasks.

The Culture Symbols identified included dress code, remuneration, awards on show in lobbies, posters on walls, busy or unused flip charts, automatic telephone answering systems. All have their cultural tale to tell.

Whichever way you slice a firm, its culture will show through. And the FCA is sure to be doing some slicing

Our trainers had seen it all, from (the good) joined-up organisations whose receptionists welcomed trainers by name, showed them to dedicated training rooms and offered technical assistance, to (the bad) stratified firms where managers had spacious offices and a separate dining room, while, behind impressive reception areas, (the ugly) minions laboured in ill-lit shabby cubicles without air conditioning or even natural light.

Whichever way you slice a firm, its culture will show through. And the FCA is sure to be doing some slicing. One of our regulatory specialists recalled a recent FCA supervision visit. Nine people from were called in. Only three were approved persons, but all were asked to describe their firm’s conduct culture.

Unless a company can instill a culture of explicit fairness principles at all levels, it is unlikely to emerge well from such scrutiny.


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SEARCHLIGHT INSURANCE TRAINING - Arranging training and consultancy for the Financial Services industry - Setting up and developing a new insurance company - Leading an asset finance company - Non-Executive director Specialties: - A versatile and innovative professional executive with proven track record - Experienced non-executive director - Experienced in takeovers and mergers - Liveryman at the Worshipful Company of Insurers - Chartered Insurer

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