"Culture transformation is difficult; even with strong leadership it takes time and consistency, but small changes can make a big difference."
The FCA has released a new paper presenting a range of views from industry leaders, professional bodies and culture experts to help firms embed purposeful cultures, hopefully leading to better outcomes for customers, employees and investors.
The regulator said that "transforming culture in financial services is a priority for the FCA and should be for firms too".
The FCA admitted that there are "barriers to creating and maintaining healthy, purposeful cultures including fear of shareholders’ short-term profit expectations and fear of the regulator itself".
Although it acknowledged that a firm’s individual purpose is their own responsibility and the FCA does not prescribe what this should be, common elements include effective leadership and governance, an inclusive environment where it is safe to speak up, and employees that have the necessary capabilities and are motivated by appropriate incentives.
Jonathan Davidson, executive director of supervision at the FCA, said: "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.
"A healthy purposeful culture should lead to better outcomes for consumers and markets, and healthy and sustainable returns for shareholders. It should also lead to a healthier and less stressful environment for employees, and a reduction in increasingly concerning mental health issues.
"However, culture transformation is difficult; even with strong leadership it takes time and consistency, but small changes can make a big difference. I hope that everyone who reads these essays will be inspired to take at least one idea back to their organisation to try for themselves and take a step towards creating more purposeful cultures in financial services."
