The FCA has published a note on its decision not to complete its thematic review into the banking culture. In particular, the note explains the reasons behind this decision and what it intends to do going forward in respect of the culture in the banking industry.
In the FCA’s 2015/2016 Business Plan, the FCA stated that it would conduct a thematic review on“whether culture change programmes in retail and wholesale banks were driving the right behaviour, in particular focusing on remuneration, appraisal and promotion decisions of middle management, as well as how concerns are reported and acted on”. The note confirms that the FCA will conclude its work after the first phase and will therefore not complete the thematic review or publish a report for a number of reasons, including:
- The Banking Standards Board has begun a piece of work focusing on similar issues. The FCA does not wish to duplicate that work.
- It has become clear that each firm has, and needs to have, its own approach. Firms need to build a strong culture from the top down, leading by example and setting the right incentives that will work in their firm, and their culture.
- A thematic review would not be the best way to achieve the desired outcome of continuing to support and drive continued cultural change across the sector. The best way forward is to continue to engage individually with firms to encourage their delivery of cultural change as well as supporting other initiatives outside the FCA.
The FCA states that it will support and drive cultural change going forward, by:
- Focusing on engagement with individual firms through supervision.
- Using its position as the conduct regulator to promote constructive discussions with various stakeholders including industry and consumer groups.
- Offering support to the increasing number of initiatives outside the FCA on banking culture.
- Demanding high standards of conduct, backed by supervision and enforcement action if necessary, such that an appropriate culture remains a top priority for banks’ management teams.