The FCA has published a discussion paper on driving purposeful cultures. It contains a series of essays from various industry leaders, professional bodies and culture experts. The aim of this is to help firms think about and embed healthy, purposeful cultures, which will lead to good outcomes for customers, employees and investors alike.
The FCA has made transforming culture in financial services a priority, and it expects firms to make it their priority too. Improving conduct across financial services was one of the key aims of the Senior Managers and Certification Regime (SM&CR), introduced in December last year.
The regulator is clear that there isn’t a ‘one-size-fits-all’ for the industry when it comes to organisational culture. Firms are all different, so will have different cultures. However, while diversity of cultures is accepted, the FCA has identified the common elements of healthy cultures, which are:
- Inclusive environments, where it is safe to speak up
- Effective leadership and governance
- Employees with the necessary capabilities and appropriate motivation
- A meaningful purpose
What do we mean by purpose?
The FCA describes purpose as “a key reason people come to work”. This will vary by individual. The financial reward will of course be a big part of it, but there are other potential reasons. For example, work can provide individuals with fulfilment and personal satisfaction. Where they feel fulfilled and motivated, they are more likely to feel engaged in the workplace. Organisations should therefore have a purpose that resonates meaningfully with their employees, with incentives that are not purely financial.
Jonathan Davidson, Executive Director of Supervision - Retail and Authorisations at the FCA, has said of purpose: “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.”
Cultural transformation is not an easy thing and it can take time. However, in publishing these essays the FCA hopes that firms will be inspired to make small changes and to try new approaches within their own business in striving for a more purposeful culture.
The essays do not represent the views of the FCA, but they provide a range of insights and highlight the importance of purpose in driving healthy cultures.