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Culture in financial services

Scrutiny by the regulator, in principle and in practice

Senior regulators globally have emphasised the necessity of establishing the right culture within financial services firms. But it is much less clear how front line supervisors assess the culture of a firm and reach decisions on whether any problems identified are sufficient to justify intervention.

We have prepared a report in which we describe how supervisors are likely to approach this complicated task identifying six areas that we expect to attract particular scrutiny. We also provide examples of positive and negative indicators that could strongly influence supervisors’ ultimate judgement as to the culture of a firm and hence the strategy and resources they should deploy in supervising it.

Key focus areas for supervisors

The “tone from the top”
The role of the leadership in setting, communicating and challenging the firm’s culture
Purpose and strategy
A clear sense of purpose and alignment between strategy, culture and values
Individual accountability
Enhanced individual accountability for specific roles and responsibilities
Remuneration and incentives
Remuneration and incentives that promote good outcomes for the firm, customers and the market
Governance and controls
A culture that reinforces good governance and controls
Mindsets and behaviours
Mindsets and behaviours that reflect the firm’s target culture and values

As well as reviewing trends in regulatory thinking on culture, this report is intended to provide you with an understanding of the perspectives of front line supervisors and the cultural indicators they are particularly alert to. This will enable you to respond to the sharpening supervisory focus on culture and better demonstrate your firm’s cultural alignment to the achievement of good customer, prudential and market outcomes.
 

Find out more by downloading the report or by contacting one of the team listed below.

You can find more reports like this at Deloitte.co.uk/ECRS, where you can also sign-up for our monthly risk and regulation newsletter.

Read more about the growing importance of diversity and culture in the supervisory assessment of firms’ culture in our blog.

About the Centre for Regulatory Strategy, EMEA

The Deloitte Centre for Regulatory Strategy is a powerful resource of information and insight, designed to assist financial institutions manage the complexity and convergence of rapidly increasing new regulation.

With regional hubs in the AmericasAsia Pacific and EMEA, the Centre combines the strength of Deloitte’s regional and international network of experienced risk, regulatory, and industry professionals – including a deep roster of former regulators, industry specialists, and business advisers – with a rich understanding of the impact of regulations on business models and strategy.

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