Avoiding Culture and Conduct Fatigue – session review

Julie Pardy, Director of Regulation and Market Engagement at WorkSmart, joined our CEO – Adrian Harvey – on the 30th November 2021 for our latest webinar: Avoiding Culture and Conduct Fatigue.

To discuss how financial firms can make the greatest impact from their cultural progression plans in 2022, our hosts considered the key issues to a ‘tick box’ approach to compliance, and what that can mean for organisations from the top down, particularly where theoretical competence, conduct and culture training fails to translate into day-to-day actions.

Our panellists discussed what the actual application of regulatory culture audits would look like in 2022, whilst the interspersed polls and comments from our audience members provided real-life insight into the current conduct and culture landscape across the sector.

Our thanks to all who attended and actively took part in the discussions. The webinar is now available on-demand for viewing below.

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“Most of the compliance professionals that I speak with on a weekly basis are genuinely curious and asking the question: what? What more can we or should we be doing?

– Adrian Harvey

As an opening to the session, our attendees were asked to rate their confidence in describing to the regulator their firm’s existing culture and conduct (C&C) journey. Most concerningly, these findings revealed that 8% had little to no understanding of what drives poor conduct and culture, whilst over a third in total (36%) rated their confidence as six or under. Fewer than 5% marked at the higher end of the scale.

“To some extent, you can understand why firms might take a ‘tick the box’ approach… However, if you as a firm pursue this as a strategy, your employees will judge you on that basis. They will judge your firm in relation to how seriously are you taking this to ensure that we are competent.”

– Adrian Harvey

Turning their attention to the FCA’s culture expectations and requirements, our panel singled out ‘tone from the top’ from the six areas discussed around cultural fit, and discussed at length why ‘tone from within’ is becoming increasingly important to the regulator in how they will build an ongoing cultural narrative of a firm in 2022.

On the topic of culture audits, Julie informed our attendees that the message from Peter Ewing (Technical Specialist at the FCA) is that firms shouldn’t expect to be landed with a single-point-in-time cultural assessment; where a questionnaire is suddenly taken of a firm to assess culture and conduct, adding weight to the point that a continual assessment methodology needs to be adopted by firms.

Adrian added that for the majority of firms, there is an understanding that training and checks must be continual, as experience will have shown that single-point-in-time assessments present shortcomings in terms of valuable Management Information (MI). Drawing on his knowledge of how our AI platform – Clever Nelly – is being applied within financial firms, Adrian went on to comment that firms opting for single-point-in-time training assessments may frequently find that theoretical training does not translate to practical application, leading instead to a lack of employee capability and competency.

Q1: How confident do you feel in describing your firm’s Conduct and Culture journey to the regulator? (1-10 confidence level)

  • (1-3) Little or no understanding of what drives poor Conduct and Culture. 8% 8%
  • (4-6) Conduct risks identified, but not acted upon. 28% 28%
  • (7-8) Conduct and Culture systems and controls in place and regularly tested. 59% 59%
  • (9-10) Ongoing monitoring; using real-time data tools that are in place to monitor and manage Conduct risk. 4% 4%
  • Other 1% 1%

*Poll results based on 168 responses. 

“Everybody is accountable for culture [and conduct]… and the greater level of education that you can give people, the more likely you are to get the commitment to actually work through on that type of approach.”

– Julie Pardy

With our hosts in agreement that single-point-in-time assessment and training provisions often form an incomplete picture of a company’s culture, the session moved on to cover individual accountability and Working from Home (WFH).

“What’s changed in terms of your employee Training & Competence (T&C) to reflect the material change to your working environment?”

– Adrian Harvey

With the FCA’s ability to visit any address where services are being conducted from, our hosts discussed what firms could expect in terms of scrutiny on how employee competency and conduct is being maintained with a distributed workforce.

In relation to the subject of maintaining employee Training & Competency (T&C), our hosts noted that the most important question that firms should be asking is what has materially changed in your firm as a result of implementing hybrid or continual WFH practices that enables you to fulfil this requirement effectively, as this would be a key question that the regulator would expect them to answer. 

Q2: What tools do you currently use to measure the culture of your firm?

  • Annual staff survey 76% 76%
  • Employee interviews 26% 26%
  • Analysing quantitative data 67% 67%
  • Other 14% 14%

*Poll results based on 168 responses. Question was multiple choice.

“We can choose to do things just because we have to, or we can use some of the regulatory initiatives to help as a business enabler.”

– Julie Pardy

From conversations with compliance and risk professionals, Adrian noted that budget cuts to mitigating culture and conduct issues within a firm can have a detrimental impact and reflects in itself a culture whereby regulations aren’t given the appropriate level of attention or care. This further impacts customers, who then receive poorer standards of service.

To close the session, Adrian and Julie spoke on the importance of firms to look inwards at their own capabilities to maintain and evidence their compliance, with tech-enabled firms at an advantage when it comes to observing the measures discussed.

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