The latest FCA discussion paper on transforming culture in financial services focuses on firm "purpose". The regulator observes that there seem to be increasing demands on firms to have a purpose beyond being profitable, and to step up on issues such as climate change, diversity and the ethical use of data. This is a significant shift from Milton Friedman's view that the only social responsibility of business was to use its resources to increase profits, while operating within the rules.

The working group set up by the FCA - which included firms, professional bodies and academics - to explore the concept of purpose considered three key questions:

- Why purpose?

This is understood as the key reason people come to work. It is important for business as it helps attract and retain talent, manage risk and focus on long-term goals over short-term gains. Purpose should be authentic, clearly defined, provide direction and be enduring.

- What gets in the way?

Fear seemed to be the common factor that prevented purpose. This included fear of short-term focus on profit, fear of regulators and rule breaches, and fear of being an outlier.

- How can we make good business good for business?

The general view was that purpose should start from the top, but engaging direct line managers who set the every day tone was important. Aligning decision making, recruitment and internal progression with the business's purpose was needed for it to resonate and be authentic.

The FCA is clear that the essays included in the paper do not represent its views, but are intended to encourage discussion of these issues and highlight the importance of purpose for financial services firms. It notes that purpose is one of the four drivers of culture that it considers in its supervisory process and it assesses the effectiveness of culture in reducing potential harm that could arise from a firm's business model and strategy.

The challenge for firms must inevitably be how to put these concepts into action in order to meet both the FCA's high level objectives and specific rule requirements.

But it is the manifestation of an organisation’s purpose that will make the difference. Ultimately, purpose needs to mean something to the people who work for you, and resonate throughout the organisation. People need to believe in it and see an organisational strategy and behaviours from both leaders and peers that are aligned to it. Evidence would suggest that this is becoming increasingly important for future generations – firms need to offer meaning, not just money.