Jonathan Davidson, Executive Director of Supervision – Retail and Authorisations at the Financial Conduct Authority, spoke at the 6th Annual Culture and Conduct Forum for the Financial Services Industry in November 2020. His topic was ‘the business of social purpose’ and how this relates to the FCA’s continued focus on firms’ culture.
Mr Davidson began by saying that a lot had changed in the world in recent months, but that the FCA’s emphasis on culture within firms was one thing that has remained constant.
His description of what a healthy culture looks like came in the opening section of his speech:
“A culture where all employees feel a purpose beyond just making money while avoiding regulatory censure. A culture where a job is not just a job. A culture where all employees feel safe. Safe from retribution for speaking up. Safe from harassment and victimisation.
“In fact, an inclusive culture where all employees feel listened to and recognised for what makes them special. A healthy culture is one where diversity is the fertile soil in which innovation and improvement flourish.”
Next, he said that a culture where non-financial misconduct was tolerated was not acceptable and made reference to the recent FCA enforcement action against three individuals as a result of criminal offences that weren’t related to their work activities.
The FCA director then said that having a positive culture had helped some firms to achieve positive customer outcomes during the pandemic. He gave the example of front-line bank customer service staff using their own ingenuity and judgement to ensure continuation of customer service, especially to the vulnerable, whilst knowing that their firm’s culture allowed them to do this without needing to obtain the prior approval of their management.
Mr Davidson also stressed the responsibilities of leaders and managers to educate their staff as to their responsibilities under the Senior Managers and Certification Regime, saying that:
“Leaders are expected to make sure that every employee knows what the five conduct rules mean in their role. For example, every colleague is expected to fully understand what acting with due care, skill and diligence means in their role.”
He then emphasised that SM&CR also requires leaders to carry out regular fit and proper checks on everyone who is employed in a senior manager or certification role.
In conclusion, Mr Davidson remarked on the changing nature of the world around us by saying:
“Financial services are truly in the business of social purpose. Social purpose increasingly matters to consumers, employees and shareholders – people want to engage with, work for and invest in, firms that are purposeful.
“The financial services sector has reached a tipping point in the journey to healthy, purposeful, safe, diverse and inclusive cultures that create healthy returns for shareholders. The question is how can we, together, tip the balance?”
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed by Scott Robert and as such are not updated. Please be aware of the facts, circumstances or legal position may change after publication of the article.