Paul Chisnall, Director, Finance & Operations Policy, UK Finance
Much of the public policy-making effort within banking and financial services over the past decade can be characterised as necessarily devoted to essential remedial action.
Post financial crisis this first took the form of financial stability measures aimed at shoring up and then strengthening the foundations of the financial system; measures focussed upon the capital and liquidity regimes, the approach to regulatory supervision, and overall improving its shock absorbency.
Attention then turned more to the conduct side of what had gone wrong and, here in the UK, following the report of the Parliamentary Commission on Banking Standards, we saw the advent of the Senior Managers and Certification Regime designed to instil heightened personal accountability. This combined with a reappraisal of remuneration and incentive structures with the aim of better aligning individual reward to longer-term corporate performance.
Other significant changes in the landscape have included the establishment of the Financial Policy Committee within the Bank of England, with its broader and more forward looking responsibilities than the Monetary Policy Committee – which retains its important role in controlling inflation – and the establishment of the Financial Conduct Authority, distinguishing regulatory responsibility for the prudential supervision of firms – principally the role of the Prudential Regulatory Authority – from conduct-related customer and market protection.
During this time, firms themselves have done much to reappraise their cultures and realign their incentive structures towards the delivery of better customer outcomes. They are also adopting positive policies on diversity and inclusion most notably under the HM Treasury ‘Women in Finance’ initiative.
We find ourselves at an inflection point. One in which banking and financial service companies can choose to approach conduct from a purely ‘compliance’ perspective, or adopt a more holistic approach, seeking to instil the values and behaviours it wishes to promote throughout the company, and in the process, defining the way in which business relationships should be conducted.
A question this asks is, how do you get the balance right between proprietorial policies reflecting the character of individual companies, and building approaches around industry-wide metrics enabling cross-firm comparability? How might you better understand good practices being followed within other firms and be able to contribute personally to the adoption of better practices within your firm? Are there suggestions that you’d like to put on the table but have not yet found the right forum for first talking through?
It is with this in mind that UK Finance is establishing its Conduct Risk and Conduct Academy. Our intention is to create a space in which individuals from within financial services firms can take part in a structured dialogue that will look at how conduct regulation differs from traditional regulation and compliance. We will also explore the extent to which good conduct is synonymous with instilling an approach to value generation that is premised more upon the long-term, sustainable success of the firm that delivers both shareholder value and societal contribution.
Designed as a hands-on, experiential programme the Academy aims to be immersive, with the faculty exploring the individual challenges of each delegate and tailoring the programme accordingly. Along the way, delegates will receive practical ‘lessons learnt’ podcasts from senior conduct risk professionals; the highlights of each training workshop summarised in a series of on demand webinars; dedicated private forums to discuss their experiences in confidence, and a Q&A panel session with the faculty and other senior practitioners to answer their critical questions.