The 5 Conduct Questions are part of our strategy for supervising wholesale banks.
We introduced this programme in 2015 and the leading wholesale banking firms operating in the UK have invested substantial efforts in change programmes related to conduct and culture. This year we have introduced the programme more widely across other sectors of wholesale financial markets.
The first step in addressing the 5 Conduct Questions was for firms to develop their own definitions of conduct risk. As their change programmes evolved, we provided constructive challenge on governance, design and implementation. Firms shared their experiences with us, providing examples of what they thought did and didn't work well.
We published feedback reports in 2017 and 2018. These annual reports played back to industry what we had been told together with some of our own observations. These reports have also served as a useful benchmark programme design and, to some degree, potential effectiveness.
Inside our latest report
Our third report has three sections. The first section provides some higher-level or strategic observations we can make after observing industry efforts over several years. The second section provides our usual catalogue of industry ideas, along with some of our own observations, arising from supervision activity this past year. The third section is a brief assessment of speak up culture and whistleblowing in wholesale banks.
Key messages in the latest report include:
- good conduct and culture is increasingly recognised as a competitive advantage
- framing conduct as an integral part of broad corporate goals has a positive impact on effective implementation
- non-financial misconduct needs much more attention from staff at all levels
We will be continuing with our supervisory engagement with firms using the 5 Conduct Questions as a backdrop to discussions. Our attention is increasingly turning to the effectiveness of programmes so far and the potential for more sustainable mindset change.
2019/20 Business Plan
The FCA's 2019/20 Business Plan sets out our overall objective of improving how financial markets operate and our operational objectives relating to protection of consumers, the integrity of markets and the promotion of competition. Among other things, the 5 Conduct Questions programme clearly supports our cross-sector efforts on firms' culture and governance including the role of ‘purpose’.