Keeping ahead of conduct regulators" culture audit expectations

The bar is rising for firms needing to prove their ?good culture? to regulators  with results of the first official global survey (IOSCO FR05/2019) of financial regulators? behavioural science to track customer outcomes and ?acceptable culture? in firms recently published. The Financial Conduct Authority (FCA) and 24 other regulators from across the globe are now using behaviour tests to check on customer outcomes. These conduct regulators broadly agree that the new behavioural approach provides sharper analysis of real levels of customer care, including customer detriment. 

As never before regulators now use these tools to question how far customer outcomes are ?acceptable and expected? across a wide range of products, markets and jurisdictions. Regulators? new tools include top-down culture audits, talking directly to front-line staff about their experiences, and fairness analysis of specific products. In the UK, as 2019 sees conduct rules (including SMCR) extend beyond banks to include insurers, asset managers and other providers, any firms that persist in using a conventional compliance approach risk finding their culture exposed to critical public scrutiny.

UK Finance has added a Culture Audit workshop that extends their popular and high-rating conduct workshop series, responding to member firms? concerns that ?The MI we have, isn't the MI we need for culture reporting?. The workshops give member firms of all kinds the best opportunity to learn in advance what the regulator expects - rather than to wait and find your front-office staff lost for words in the face of an unexpected culture question from a FCA case officer. 

Among members, many lead managers for culture initiatives ask us routinely for an industry-wide view of whether their own approaches are valid and worthwhile, and how likely the regulator is to approve them. Talking regularly to conduct and culture leaders across the industry, and debriefing with firms who have faced enforcement actions, we know what the ?culture audit? approach means for firms in practice. In summary, you first need to know which elements of behavioural science regulators care about, then how they use them, and finally which culture factors and indicators support effective reporting. For the many firms who are concerned that their existing MI falls short, we can help frame better audit questions and offer pointers to developing best practice across the sector as a whole.

Dr Roger Miles will be leading the UK Finance Auditing Your Culture workshop on 29 April where he will provide first sight of a range of firms? culture reporting designs, straight answers to common questions from culture project team leaders, an industry-wide informed view of which MI sources are most valuable, which indicators are most effective, and an update on the latest research sources that inform regulators? thinking. You can book on to the Auditing your Culture workshop here.

Auditing Your Culture: Going Beyond Expectations ? 16 July 2019

This workshop directly answers enquiries from the many individuals charged with measuring their bank's culture: How to identify and track culture credibly; which indicators are most useful to include on a culture dashboard; and what sources inform the regulator's thinking?

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