On 24 July 2015, Ms McDermott delivered a speech at the British Bankers’ Association Conference “Wholesale Markets and Risk: FEMR and beyond” in London. The key areas discussed included:
- Regulators and the industry – the FCA’s role in working with the industry on solutions to rebuild reputation and embed cultural change.
- Five conduct questions – firms to identify and manage conduct risks by asking themselves: (1) how to identify the conduct risks inherent within their business; (2) who is responsible for managing the conduct of their business; (3) what support mechanisms there are to enable people to improve the conduct of their business or function; (4) how the board and executive committees gain oversight of the conduct of the firm; and (5) whether there are any perverse incentives, or other activities, that undermine any strategies implemented to answer questions (1) to (4).
- Individual accountability – creating a system in which individuals are accountable for their actions.
Ms McDermott commented that “The risks arising from misconduct is [sic] one of the largest contingent risks on a firm’s balance sheet. It rarely matures, can’t be sold or hedged using normal market instruments. Any other risk this large, with these characteristics, would be managed and mitigated to within an inch of its life. Yet stick the word ‘conduct’ in front of it and suddenly it is not.”