The financial services industry has the “narrowest of opportunities” to make cultural change stick before the economy recovers and the financial crisis is forgotten, says FCA chief executive Martin Wheatley.
In a speech to the Worshipful Company of International Bankers yesterday, Wheatley said he has a “serious concern” that economic recovery will bring so much investor pressure for growth that culture and ethics will become second or third order issues.
He said: “We have the narrowest of windows here to make cultural change stick before memories of financial crisis fade. The key challenge is how we take advantage of this ‘opportunity’.”
Wheatley said the industry can achieve this through “effective, future-proofed regulation” from the FCA, and effective self-regulation.
He said: “The key issue here is how do firms create cultures that are genuinely different from those pre-crisis? And, crucially, how do we encourage change that keeps pace with economic growth? In other words, a culture strong enough to resist short termism.”
He cited a survey of senior executives in financial services by the Economist Intelligence Unit last year, which showed 53 per cent of executives said career progression at their firm would be difficult without flexibility over ethical standards. Wheatley said this suggests some business leaders are still struggling to get their message across.
Wheatley said: “This suggests not all cultural reform proposals have been understood or accepted; it is imperative they are.”
He added: “Perhaps our best hope for the future remains the fact that the promotion of strong ethics in firms is not a zero-sum game.
“We cannot hope to avoid all future crises, or anticipate every issue that bubbles up. But we can safely say it is in all our interests to choose long-term, sustainable growth – over short-term ‘enchanted wealth’.”