Martin Wheatley, Chief Executive of the Financial Conduct
Authority, offers a salutary warning that progress towards a better
culture and behaviour needs to be 'locked in' now while there is a
strong public focus and attention on this.
Preventing culture from going south as profits head north
- This is the first year that the FCA has been strongly promoting
the requirement for both firms as well as the wider financial
services sector to improve culture and ethical behaviour.
- Historically, the financial services sector was strongly
associated with the importance of integrity. More recently, and
particularly post-economic crisis, the public perception of the
sector seems to be more akin to the Wolf of Wall Street than the
Quaker values of yesteryear.
- Considerable strides are being made to rebuild public trust and
improve the culture and ethics of the sector by individual firms.
However, there is a danger - according to the FCA - that any future
economic recovery will reassert the bad old ways, and that good
culture will revert to being a second or even third order
- Martin Wheatley sets out the danger of the cycle of the
"something must be done" reaction to crises and scandals. This
reaction often leads to increased regulation, reinforcing the
"obedience mentality" that can reinforce the problem in the first
- Mr Wheatley argues for creating an improved culture now; one
which will be able to resist future economic pressures and future
short-termism. He argues that, along with structural changes in the
sector, the promotion of strong ethics in firms is a non-zero-sum
game. It will benefit not only the firm itself, but the wider
reputation of the sector.
- It is impossible to avoid all future crises, but it is in all
of our interests to choose long-term sustainable growth over
short-term "enchanted wealth".
View the attached document
CII Ethics Paper no.3: Ethical culture: securing an ethical
culture in a regulated environment (Nov 2013)
Ethics Paper no.2: Ethical culture: a practical guide for
small firms (Sep 2013)
Paper no.1: Ethical culture: building a culture of
integrity (Sep 2013)
CII Thinkpiece 100: Product intervention in financial
regulation: keeping the customer's interests at heart, by Chris
Woolard (Sep 2013)
CII Thinkpiece 98: Can a leopard change its spots?
'Repurposing' UK conduct regulation, by Richard Hobbs (Jun