See below for part two of Dr Roger Miles' Conduct and Culture blog series. Part one, Conduct, Culture and Covid-19: Engaging with a disrupted landscape can be found here.

The new regulatory approach to Conduct appraisal sees a move towards qualitative (word-based) reporting from live observation of how firms? staff are actually behaving. There is less outright reliance on formal, quantitative risk reporting and much greater use of ?unstructured data?.

The ?conduct and culture audit? will also draw data from ever wider external sources - Glassdoor, Trustpilot, customers? own informal chat rooms, and so on. Expect also to see greater use of ?reg tech?, with AI-assisted language analytics set to hunt for patterns of abusive activity among firms? unstructured data such as emails, phone calls and voice trade recordings.

Mostly though, the regulators are looking to expand their so-called ?floor-walk? tests; visiting firms? offices, or dropping in on team Zoom meetings or board meetings, to observe how much Conduct awareness is visible in people's routine work. Now is therefore exactly the time to get started with preparing all staff to raise your firm's Culture reporting game.

In case it's an alarming thought to contemplate your junior staff having to look a regulator in the eye and give an unrehearsed answer to an open-ended qualitative question, there is a parallel trend which gives us cause for comfort. Since its introduction in 2013, Conduct regulators? agenda largely consisted of finding infractions - events of misconduct - in order to punish it and so (the belief went) to engender behaviour change. Now however the mood music is turning more positive, as conduct regulators talk about ?coaching? firms to produce and celebrate ?exemplary conduct?.

For practical reporting purposes, we should be identifying and highlighting our many pre-existing good practices. On that positive note, here's where the new culture-based view of conduct reporting comes into its own: motivating staff and creating business value.

At the Conduct and Culture Academy, we look hard at current and expected future best practice. We can predict with confidence where regulation is heading over the next couple of years and will offer practical ways not only to engage with current expectations, but to keep ahead of them, earning the appreciation of regulators - and of stakeholders generally.

Part three of the series, Conduct, Culture and Covid-19: Engaging with a disrupted landscape, can be found here.

Join us on our Conduct and Culture Academy: learn more here.