Rules making bank managers accountable for misconduct under their watch and the ability to take back bonuses from misbehaving officials have been key to improving culture in the British financial services industry, Andrew Bailey, CEO of the U.K. Financial Conduct Authority, said March 19.
British regulators implemented the Senior Managers and Certification Regime among British banks in March 2016 and are working to extend the rules' scope to cover other financial services firms. The regime makes senior officials accountable for misconduct in a financial institution that takes place during their time as managers, putting them at risk of regulatory sanction.
Financial institutions in the U.K. may also defer variable remuneration for their managers and must put a significant part of such bonuses at risk of being taken back if a breach is discovered at a later point.
"Early on, I was told quite often that deferral would not be accepted and would fail as a policy. I have not heard that refrain in recent years, which in itself illustrates that cultural values and attitudes of this sort do change quite quickly," Bailey said.
Bailey also called on companies to pursue diversity at the workplace, warning that a lack of diversity would put a company at risk of group-think. He voiced support for the use of targets and measurement, such as rules requiring British firms to disclose their gender pay gap data, in improving company diversity.
The FCA recently laid out a series of essays that tackle improving corporate culture.