The 5 Conduct Questions are part of our strategy for supervising wholesale banks.
We introduced the 5 Conduct Questions for wholesale banking in 2015. Since then, leading wholesale banking firms operating in the UK have invested substantial efforts in change programmes related to conduct and culture.
When firms started addressing the 5 Conduct Questions, they developed their own definitions of conduct risk. They shared their experience with us, providing examples of what they thought did and didn't work well in the design and implementation of their change programmes.
Last year we published our first 5 Conduct Questions report summarising what firms had been telling us, accompanied by some of our own observations.
Inside our new report
Our second 5 Conduct Questions report, published this year, indicates that most firms have made further progress. Once again, we are feeding back to industry what we've been told by firms, accompanied by examples of good and poor practice and some observations from us. It's clear that programme design has implications for speed of implementation, staff buy-in and, ultimately, continuing effectiveness.
The report includes:
- the importance of a design and overall governance
- identifying conduct risk
- fostering staff engagement and responsibility
- provision of broad support for staff
- insightful use of management information
- considering the risks or unintended consequences of internal initiatives
We are extending the 5 questions approach to include other segments of the wholesale sector. Initially this will include areas such as asset management, trading firms and trading venues.
2018/19 Business Plan
The FCA's 2018/19 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.