The Covid-19 pandemic has dominated discussions in the business world throughout 2020. Fortunately, the rolling out of a vaccine provides hope of a gradual return to normality during 2021. The pandemic has posed significant challenges to individuals and businesses, bringing about rapid and profound changes to the way in which we live and work. Prior to the pandemic, one of the main areas of focus for the regulator was the embedding of ‘healthy’, ‘purposeful’ cultures within financial services firms. As we approach the end of a dark year and look forward with a degree of cautious optimism about the New Year, it is perhaps timely to reflect on what we have learnt about culture during 2020 and how we can ‘build back better’.
During the Great Recession of 2007-08, the financial services sector was viewed as a part of the problem, prompting the regulators to take steps to improve conduct and culture within firms. During the current crisis, however, financial services have helped ease some of the problems faced by consumers and businesses. Measures taken around the protection of vulnerable customers and those in financial difficulties, for instance, have provided some respite to those affected by Covid-19. Firms, with the support of the regulator, have shown flexibility around customers’ circumstances and have worked to reduce the risk of harm for consumers and the market. They have also managed their own financial and operational resilience whilst continuing to support and service their clients.
To an extent, fighting Covid-19 and its consequences has given some of us a renewed sense of purpose and has arguably been a driver of positive culture within the financial services industry. Financial services staff across the country have been going about their business not only to generate profits for their shareholders, but also knowing that they have a social purpose and are making an important difference to the lives of their customers.
This is consistent with the FCA’s ongoing ambition to improve conduct and culture at all levels within financial services and to encourage healthy, ‘purposeful’ organisational cultures within firms. This customer-centric approach, in which treating customers fairly and acting in their best interests is paramount, should remain uppermost in firms’ cultures beyond the pandemic.
The pandemic has also resulted in cultural changes within firms, with many businesses having to adapt to widescale remote working for a prolonged period. This has been a significant change to people’s working practices. The increased flexibility has been a blessing to some, but to others, it can seem that the workplace has pervaded their private sphere, causing challenges. This may be particularly true of individuals who have had to juggle childcare with work expectations or have struggled with feelings of loneliness and isolation.
Managers and supervisors have therefore had to adapt their management styles to support, monitor and motivate employees who are working from home. Arguably, this has put a greater emphasis on the importance of listening to staff and their concerns and communicating effectively with them to ensure the business needs continue to be met, whilst also having regard for the challenges that individual team members may have been facing. So-called ‘soft’ skills such as communication and empathy have played a meaningful role in addressing the challenges of the pandemic.
The role of managers as listeners and motivators will be equally as important when staff return to the office. With the deadline for Conduct Rules training due in March 2021, Senior Managers have a duty to ensure that all relevant employees understand how each of the five Conduct Rules applies to their jobs, and that staff are fit and proper to undertake their roles and remain so. Managers need to demonstrate to staff why compliance with the Conduct Rules is important and should show that it is more than a tick-box exercise.
Managers will also play an important role in encouraging healthy organisational cultures, in which staff may ‘speak up’ about their concerns, including financial or non-financial misconduct, safe in the knowledge that they will be listened to and appropriate action taken.
Culture has been, and will continue to be, an area of focus by the FCA so firms should continue to take steps to foster healthy organisational cultures.