By City AM reporter
Where the City’s movers and shakers have their say. This week, Lucy McNulty, editor of the Following the Rules podcast, takes the Notebook pen.
The City needs more visibility into the scale of its bad behaviour
The Financial Conduct Authority’s recent efforts to police finance firms’ handling of lapses in
their employees’ behaviour outside of their day job, or non-financial misconduct, more
closely, has left the industry hungry for more direction.
The announcement this week of a new FCA probe into sexual harassment and bullying at
the City’s banks and insurers follows the publication late last year of draft proposals
clarifying some of the behaviours that the regulator thought signified an individual was
unsuitable for a senior role in financial services.
Standard Chartered’s compliance chief Tracey McDermott told the Following the Rules
podcast that the draft measures, set to come into effect next year, would bring some much-
needed “consistency” to firms’ decision-making around City workers’ suitability to do their
jobs.
But McDermott said: “There is still scope for more clarity and more specificity.”
While clarifying rules is undoubtedly helpful, the industry would greatly benefit from more
insight into the scale and types of problematic behaviour common within the sector.
And the good news is that the regulator already has such data on hand.
As part of rules introduced to drive greater accountability in the sector’s top ranks, finance
firms must notify their supervisors if they take action against employees for failure to adhere
to the behavioural standards their role requires. Firms must also inform their regulators if
they have concerns around a senior worker’s fitness and propriety to do their job or if
anyone within their top ranks have left their post while under investigation.
And the regulator’s latest probes into non-financial misconduct will provide them with yet
more data to tap into.
Such mandatory disclosures provide an opportunity to establish current and historic volumes
of the most common types of interpersonal misbehaviour within the sector.
So let’s get some visibility into the scale of the problem.
If the City watchdog is serious about helping firms to stamp out such misbehaviour, it should
start by disclosing just how prolific it is.
Sharing such information with those tasked with addressing the City’s most problematic
behaviour, would go some way to helping them track their progress towards that goal.
Is the allure of Davos melting away?
The World Economic Forum in the Swiss Alpine resort of Davos has long been the
pinnacle of the business world’s conference circuit. But this year several prominent business
leaders opted to stay away. Those reported to be giving Davos a miss included John
Studzinski of fund giant Pimco, Hendrik du Toit of asset manager Ninety One and Dame
Anne Richards of investment manager Fidelity International. With so many rival conferences
worldwide and so much more focus on the climate damage caused by business travel, is
Davos finally losing its allure?
It’s time to decide how we regulate our regulators
The House of Lords’ Industry and Regulators Committee is set to publish the findings from
its inquiry into the relationship between regulators and the government in early
February. This report will kick-start a parliamentary debate on the best means to hold our
regulators to account. Such a debate cannot come soon enough.
Brexit prompted wholesale changes to the UK rulebook for financial services and handed the
City’s watchdogs a whole raft of new powers, but without the corresponding adjustments to
the checks and balances on how they go about their newly extended to-do list.
Efforts to introduce proposed ‘call in powers’ would have allowed lawmakers and Treasury
officials to force regulators to make, amend or revoke rules if doing so was deemed in the
public interest. But the move prompted concerns that politicians could use the amendment to
exert undue influence over UK regulators and that these powers could thereby compromise
the independence of our regulators. Ultimately, such concerns pushed the government to
shelve the proposals before they could be properly debated.
An opportunity to revisit this debate should be welcomed.
[AI] could change the course of history not necessarily for the good
(Mis)conduct, Money and Reputation
This monthly podcast series from reputation specialists Lansons and law firm Katten offers
practical guidance on regulatory expectations when it comes to policing misconduct in the
finance sector.
Using some of the sector’s most prominent cases of suspected misconduct
as examples, the podcast hosts Lansons partner David Masters and Katten partner Neil
Robson work with guest experts to explain regulators’ approach to the situation in question
and outline the action points that should be drawn from that by both the watchdogs and the
workers they oversee.
This is a must-listen for anyone tasked with understanding regulatory requirements around conduct or managing the reputational fallout when things go wrong. But it’s also an engaging listen for anyone with an interest in financial services.
