5 Conduct Questions Programme

We introduced the 5 Conduct Questions as part of our strategy for supervising wholesale banks.

This programme was launched in 2015. Since then, the leading wholesale banking firms operating in the UK have made substantial efforts in their change programmes on conduct and culture. In 2017 we began introducing the programme more widely across other sectors of wholesale financial markets.

The first step in addressing conduct risk was for firms to develop their own working definition. As their programmes evolved, we provided constructive challenge on governance, design and implementation. Firms shared their experiences with us, providing examples of what did and didn't work well. Firms’ corporate purpose also provides an important backdrop to these efforts.

We published feedback reports in 20172018 and 2019 playing back to industry what we were told, together with some of our own observations. These reports provided a useful benchmark for programme design and, to some degree, potential effectiveness.

Inside our latest report

Our latest report reflects our widening engagement. We hosted Conduct Roundtable sessions with 18 wholesale banks, each represented by a group of 10 staff at Vice President level, typically reflecting about 10 years of industry experience. Each session included a short, written survey and a longer discussion of organisational, operational, regulatory and personal topics. In this latest report we preserve anonymity while sharing what we learned.

Key messages in the latest report include:

  • Conduct and culture change programmes are having a positive effect.
  • While awareness of conduct risk is higher, skills to identify these risks must improve. This is especially important in the evolving Work from Home operating model predominately in use.
  • Psychological safety for day-to-day speaking up and challenge still needs attention from staff at all levels.
  • Remuneration strategies that focus on the ‘how’ as well as the ‘what’ are a positive development but more can be done to fully harness strategic benefits.
  • Corporate purpose and principles have become confused. CEOs and line managers can help clarify how these terms link to individual roles and responsibilities.

Next steps

Covid-19 has created new and greater conduct risks. It will be important for firms to engage staff at home in the effort to identify potential sources of harm in their individual environments. We will continue with our supervisory engagement with firms on their change programmes and their effectiveness. We will also be focusing on new risks emerging from LIBOR transition and other market developments more generally. 

Page updates

02/09/2020: Information added 2019/20 report added