The financial services industry has the “narrowest of opportunities” to make cultural change stick before the economy recovers and the financial crisis is forgotten, according to FCA chief executive Martin Wheatley.
In a speech to the Worshipful Company of International Bankers last week, 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 the 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 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.”
Wheatley said a survey of senior financial services executives by the Economist Intelligence Unit last year showed that 53 per cent believed career progression at their firm would be difficult without flexibility over ethical standards, suggesting that some business leaders are still struggling to get their message across. 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. It is in all our interests to choose long-term, sustainable growth over short-term ‘enchanted wealth’.”
Thameside Financial Planning director Tom Kean says: “We know from past experience that neither self-regulation nor heavy-handed regulation works and if Martin Wheatley thinks he can change market culture by simply combining the two, he is likely to be mistaken.”