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Developing purposeful cultures in the financial services sector

  • United Kingdom
  • Financial services disputes and investigations
  • Litigation and dispute management


The FCA recently published a discussion paper on transforming culture in financial services. The paper is a collection of short essays by industry leaders, professional bodies and culture experts and is aimed at helping firms to develop and embed purposeful cultures. The paper is intended to encourage discussion on the topic of culture and purpose; the FCA is not requesting formal feedback but will use the ideas in the paper as a starting point for future work on this theme. 

Transforming culture in financial services is a priority for the FCA, which has been tackling the issue in a number of ways, including by focusing on diversity and inclusion and non-financial misconduct. However, the regulator recognises that there are barriers to creating and maintaining healthy, purposeful cultures. The essays provide ideas on how leaders in the financial services sector might go about overcoming these barriers and embedding purpose in their organisations. The FCA’s view is that healthy, purposeful cultures bring a range of business benefits, including better outcomes for consumers and markets, sustainable returns for shareholders, and less stressful workplaces for employees.

Commenting on the paper, Jonathan Davidson, FCA Executive Director of Supervision – Retail and Authorisations, stated: “The purpose of a firm sits at the heart of its business model, strategy and culture. Unhealthy cultures and purpose have been at the root cause of too many mis-selling and other conduct scandals in financial services. I want to see strong leadership creating purposeful cultures where it is safe to speak up and diversity is encouraged and listened to.

The FCA does not prescribe what firms’ culture should look like, as this is for each firm to define. However, in his introduction to the paper Davidson comments, “while healthy cultures can be diverse, the consensus is that they can also share common elements. Two particular elements have come up in our conversations time and time again: healthy cultures are purposeful and they are safe.”  ‘Safe’ in this context means an environment in which employees feel comfortable to express their opinions and are listened to when they do. 

Davidson adds that while a focus on purpose should start from the top, “engaging those in the middle is key as it is our direct line managers who set the tone every day for each of us”. This chimes with recent comments from FCA Enforcement on the role of middle management in misconduct cases. While much of the discussion on culture to date has focused on senior management and ‘tone from the top’, given that middle management also plays a key role in influencing how firms conduct their business, firms should expect to see a heightened regulatory focus on this area.

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