5 ways to flourish under Conduct rules


As a society we believe that there are some services and utilities that are so important to the smooth running of our communities that they need a degree of oversight to ensure that they function properly. The degree of scrutiny that is undertaken of each industry depends mainly on three factors:

  • The impact that failure or damage to that industry would have on broader society

  • The desire for public oversight and sense of duty that it is felt that industry should maintain

  • The level of trust that is perceived by the populace towards that industry

Right now, and for the last 10 years there is one industry that has been feeling the heat as it triggers highly visceral responses in each of these categories – finance, and in particular banking.

Given the highly complex nature of the financial services sector, and the ways in which regulation failed to prevent previous crises, the UK finance regulators have taken the approach of guiding the underlying behaviours which direct the industry rather than legislating for every possible eventuality. Logically this is the only way for such an industry with infinite routes available to it to be regulated – tackle problems at the source so the motivations and intent behind actions can be challenged rather than just the acts themselves.

Unsurprisingly, even though this approach has been at the heart of regulation for several years now, the industry is still finding such a notionally abstract approach difficult to respond to. Conduct has been transformed into Conduct Risk, which in turn becomes a risk framework, which in turn becomes a reporting exercise in dashboard data.

It has not become the permanent conversation we need about why we do what we do, and how we do it.

At the top level, there are a set of mindsets which need to be developed and driven deep into organisations which can lead to Conduct being less feared, better understood and used to allow firms to flourish.

  1. Accept the privilege of being trusted Trust need not be a burden. It is undoubtedly a responsibility, but it is one which should be worn with pride rather than fear. If you are trusted it means that you are providing something of value to those around you, and this should make you proud. Banks are enablers of individual dreams, community ambitions and societal stability. Homes are bought, schools are built and trade keeps the world turning. If we accept the desire to be trusted, conduct becomes a natural cornerstone of how we operate.

  2. Build a trust capability From the desire to build trust there emerges the need to be able to accomplish this. At individual and organisational level we need to decide to make ourselves able to engender trust – we often look at this in individual levels, but we need to step up a level and see how our organisations act, respond and think in a trustworthy manner.

  3. Create a collective perspective Within our organisations we need to build a coherent standpoint on what ‘the right thing’ is – in line with our personal and group values, our business model and our responsibilities to our customers. Once this is set it becomes dogma, and we need to view all our decisions, actions and products through this lens.

  4. Focus on the difficult areas As the saying goes, “problems never get better with time”. If you know that there is potential for a difficulty, you need to act on it now. Leaving it to sort itself will most likely just embed the challenge in propagated behaviours and actions. It is the difficultly ‘grey’ areas in the finance sector that will trip you up – avoiding asking the question will leave you open to challenge in the future.

  5. Build the best business you can The truth is, nothing in the FCA high level conduct rules would look out of place in a “Successful Business for Dummies” book. Manage your business properly? Don’t create an unsustainable business model? Don’t mislead your customers? Have the skill and knowledge required to run your business? These are hardly hard-hitting revelations, they are just good business.

Perhaps the best way to flourish under Conduct rules is to not be distracted by them – just make them part of your everyday, and the you can focus on building the best business you can.

#culture #conduct #leadership

UNDER THE HOOD...
RECENT POSTS
ARCHIVE
SEARCH BY TAGS
No tags yet.
FOLLOW US
  • Facebook Basic Square
  • Twitter Basic Square
  • Google+ Basic Square

TMD International, The Officers’ Mess, Royston Road, Duxford, Cambridge, CB22 4QH

© 2017-2018 by TMD International