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Compliance tip: Meeting FCA expectations around culture

File image of man carrying boxes of paperThe FCA’s focus on firms’ culture and conduct is set to intensify as it begins its preparations to roll out the Senior Managers and Certification Regime. The consultation papers released in December provide a good indication of the regulator’s direction of travel, with culture, particularly the tone from the top, being a key consideration.

Below are four key areas firms need to consider for compliance with both the forthcoming regime and the regulator’s wider cultural expectations:

  • Senior accountability: The behaviours and attitudes of a firm’s senior management team have a significant influence on culture. Through the SM&CR, business leaders will be held personally accountable for any failings or weaknesses within a firm’s culture.
  • Accountability at all levels: Ownership and accountability for positive consumer outcomes is not solely the responsibility of senior management. Employees at all levels are expected to take responsibility for delivering them. Governance structures, remuneration and incentive schemes should therefore act as influencers to encourage the right behaviour.
  • Clear articulation of what good looks like: A positive culture must be articulated and driven from the top, with staff at all levels having a clear knowledge and understanding of the firm’s expectations of the outcomes customers receive, backed by comprehensive and regular training.
  • Proactive identification of emerging risks: Firms should use management information to assess the inherent risks to customers from their culture, business model, strategies and operational procedures. Steps to address risks should be taken when they are uncovered.

Phil Deeks is technical director at TCC


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