Culture in financial services 'must change'

The Financial Conduct Authority (FCA) has suggested that the financial services sector in the UK needs to undergo cultural change over the coming years if it is to avoid regulatory clashes.

In new documents published outlining the new body's approach to supervising the UK's financial services industry, it has suggested it will work pro-actively with firms to ensure they are acting in the right way before relying on legislation to challenge them, reports Out Law.

"We are putting a particular emphasis on understanding the culture within a group: the way you conduct your business, what you expect of your staff, and your attitude towards your customers," the regulator explained.

Culture must be demonstrated from the top down and is best expressed through which behaviours businesses choose to reward and which they choose to punish, the FCA added.

Changing companies in this way will ensure they treat customers in the right way and prevent any systemic abuse from taking place, ensuring that morale-damaging scandals will be avoided.

Financial regulation expert Monica Gogna of Pinsent Masons said the document had emerged from an ongoing consultation process within the FCA as it wrestles with the best way to approach its duties as a regulator.

"It is a clear indicator that the FCA is seeking to ensure that they have a joined-up approach with regulated firms on this matter irrespective of the different kinds of business being performed and the different levels of risk facing each category of firms," she added.

Rather than approaching the process in a dry or doctrinaire way, the organisation hopes to engage with finance firms to assess what difficulties they are facing - for instance, by examining how their governance procedures work and suggesting ways in which they could be improved.

The FCA's comments follow a host of problems with the financial services industry, including the mis-selling of complex insurance products to businesses and consumers.