On 12 March 2018, the UK Financial Conduct Authority (FCA) published Discussion Paper DP 18/2 Transforming Culture in Financial Services (the DP). The DP presents a series of essays authored by practitioners, academics, industry leaders, and regulators on four themes, to generate discussion and debate in the industry on ‘how to drive cultural change’. The four themes of the DP are:

1. Is there a ‘right’ culture?
2. Managing Culture – The role of regulation
3. The role of reward, capabilities, and environment in driving behaviours
4. Leading culture change

The paper presents a number of issues for further consideration. In the interim, it calls on firm to consider how to start driving change now, including:

• Using behavioural science to guide incentives and cultural change.
• Looking beyond the role of leadership in effecting change, including looking at the role of middle management in achieving good culture.
• Applying strategic focus to the continuous process for adapting culture.
• Fostering environments of trust to encourage openness and learning.
• Applying a systems perspective in assessing both internal culture and external influencers, to avoid merely identifying the cause and effect of bad behaviour or a conduct rule breach, and instead considering the whole system.

Improving culture across the industry continues to be a topic of focus for the FCA, and other international regulators, since the financial crisis. AIMA will represent members in the FCA’s ongoing work on this topic. We will also follow-up with further work on this topic over the coming months, to consider what it all means in the context of the asset management industry. If members have any questions, please contact Adele Rentsch, Oliver Robinson or Adam Jacobs-Dean.