According to the consensus of a selection of essayists writing in the FCA’s recent discussion paper on transforming culture, “yes”. The FCA considers that unhealthy cultures in financial services have been a key cause of major conduct failings. A consumer-focussed culture would make a firm more attractive to both customers and talented employees and thus more profitable. Achieving such a culture might require the necessity of financial services firms fostering of a more open environment. Employees should feel they can speak up where they see things going wrong without negative consequences. Genuine mistakes should be a learning opportunity not something to be swept under the carpet. Only in this way can a change in culture be chosen by employees argue the essayists.

The FCA’s introduction to the essays states that its regulatory focus is on what it considers to be the four main drivers of culture: firm purpose, leadership, approach to reward and people management and governance arrangements, and that its thinking about culture is driven by two fundamental concepts: individual accountability and the role of leaders in managing culture.

The question of “what is culture?” is answered by the FCA. It is “the habitual behaviours and mindsets that characterise an organisation”. An organic combination where there is no “right” or one size fits all standard. What is a good culture, how culture should be established or how culture should be measured, is not specified by the FCA although the essayists engage with these topics. Rather the FCA sees the regulator’s role as being to provide minimum standards such as those in the accountability regime. Firms too have a role: narrow focus on performance-based financial incentives can lead to inflated performance and concealment of poor results. Even simple changes such as calling a potential customer a pensioner rather than an investor can influence behaviour favourably. Firms need to address not just adherence to the rules, but how they deal with customers at all stages of the relationship, how they reward employees and what they reward employees for.

One of the essayists remarks “Like losing weight, culture change is not an 8-week crash diet or a single project but a whole lifestyle change”. It is a change that firms need to take on board to succeed is the message given. This paper is a good start for a firm wishing to stimulate thinking on behavioural matters within their own organisation, to engage in the wider debate on transforming culture that the FCA is seeking to stimulate and to understand and to discuss culture with the FCA in a way that reflects the firm understands the expected cultural change in financial services.