The PRA has published a speech given by Andrew Bailey (CEO, PRA) entitled Culture in financial services – a regulator’s perspective.
Key points in Mr Bailey’s speech include:
- the culture of firms and the people that make them up is of the utmost importance to financial regulators;
- culture is a product of a wide range of contributory factors: (i) the stance and effectiveness of management and governance; (ii) the structure of remuneration and the incentives it creates; (iii) the quality and effectiveness of risk management; and (iv) the willingness of people throughout the organisation to enthusiastically adopt and adhere to the tone from the top;
- there has not been a major prudential or conduct failing in a firm that did not have among its root causes a failure of culture as manifested in governance, remuneration, risk management or tone from the top; and
- regulators are not able to determine the culture of firms. They cannot write a regulatory rule that settles culture. Rather, it is the product of many things, which the regulators can influence, but much more directly which firms themselves can shape.
View Culture in financial services – a regulator’s perspective, 9 May 2016