The FCA has published its feedback to the ‘5 Conduct Questions‘ that it asks wholesale banks on an annual basis. The purpose of these questions is to help firms improve their conduct risk management and support a change in culture.
The questions are:
- What proactive steps do you take as a firm to identify the conduct risks inherent within your business?
- How do you encourage the individuals who work in front, middle, back office, control and support functions to feel and be responsible for managing the conduct of their business?
- What support (broadly defined) does the firm put in place to enable those who work for it to improve the conduct of their business or function?
- How does the Board and ExCo (or appropriate senior management) gain oversight of the conduct of business within their organisation and equally importantly, how does the Board or ExCo consider the conduct implications of the strategic decisions that they make?
- Has the firm assessed whether there are any other activities that it undertakes that could undermine strategies put in place to improve conduct?
The FCA notes overall that firms have continued to make significant improvement in their conduct initiatives, but that boards and executive management should continue to challenge themselves on points including whether conduct and related programmes are suitably framed against the firm’s purpose and longer-term competitiveness and sustainability, and whether firms are doing enough to address non-financial misconduct and personal misbehaviour.