The financial services world moves on apace, continually evolving and improving in terms of its reputation and value to customers.
Over the next 15 months or so we will see the implementation of two significant pieces of regulatory change: Mifid II and the senior managers and certification regime.
Whether these end up being contemporaneous in their implementation (both are set to go live in the first quarter of 2018) or phased, the impact across the market, from the largest global institution to the local investment specialist, will be significant.
But their success will be measured by how much firms embrace and develop the culture and behavioural changes that the Government and regulators are looking to secure.
Just as we began to wind down for the festive period in the final two weeks of last year, the FCA gave us a couple of stocking fillers to ruminate over.
Occasional papers 24 and 25 may have crept in under the radar but, given the importance the FCA attaches to the areas covered, getting under the skin of where it is coming from will assist greatly in ensuring the regulatory changes are applied with the spirit intended to fundamentally move the sector forward.
The two papers challenge incentives for compliance, decision-making, morality and rule-breaking against the backdrop of the volume of misselling over the past few years, and the causes of the financial crisis.
The important messages coming from these papers is that a framework can be put in place and regulators can use credible deterrents and exercise their enforcement powers.
However, unless there is a dogged desire to do the right thing, then no matter what framework is in place it will not be successful.
The FCA has already looked closely at decision-making for consumers but a lot of the behavioural biases that affect them can have similar influences in a professional capacity. The regulator is interested in how morality and culture can have a positive impact on decision-making in a compliance environment.
What the papers ultimately seem to be asking is how mature compliance is. Has it moved on from the tick-box approach that did nothing to ensure the outcomes were right?
The senior managers regime requires all senior managers and the next tier of certified staff (those requiring a qualification) to be deemed fit and proper by the firm. And that is interesting – because it is down to the firm, not the regulator.
This puts the onus on the firm to instil a culture driven by moral codes, where ethical considerations are relevant at the time of the decision making, meaning wrongdoing is far more difficult to rationalise.
This focus on the culture, collective responsibilities and personal accountability is very much front and centre for the regulator. It will no doubt be reflected in further thematic reviews and supervisory activity this year.
Simon Collins is managing director, regulatory, at Eversheds Consulting