Preparing for Conduct reporting and Culture Audits

From 2019, every senior manager in every asset management firm must be able to give sound answers to new questions from the UK’s behavioural regulators (FCA and PRA), about the state of their firm’s Culture of service and the Conduct controls that support it. Each Senior Managers in the firm will soon be personally responsible for identifying and answering for the ‘acceptable and expected’ conduct of all staff – or face an enforcement intervention for failure to take reasonable steps to prevent detriment to clients. From 2020, the entire staff of the firm must also be ready to answer such questions.

A firm’s commercial value and continued existence will soon depend on satisfying the regulators’ ‘Culture Audit’ questions, which probe for weaknesses in each firm’s claims to provide good service, modern governance of risk and pro-social outcomes. Faced with this entirely new kind of audit requirement, many firms have been wrestling with the discovery that “the type of management information (MI) we’ve had in the past is not the MI we now need”.

As well as having to formally prove their competence and show the active steps they are taking to manage Conduct and Culture, firms’ managers must understand the essentials of behavioural reporting, with dedicated frameworks for behavioural risk, culture audit reports and conduct evidence dashboards. Firms also need to prepare all staff to be ready and able to give coherent answers to an inspector’s questions about good conduct and to point directly to examples of a healthy workplace culture, including evidence of ‘constructive challenge’ throughout the firm.

At first, this seems a forbidding obstacle to overcome. The solution is not to approach Conduct and Culture simply as Compliance challenges, but to look to embrace the new measures as a positive opportunity to build business value and resilience in the firm. At this event, one of the UK’s most experienced specialists in Conduct and Culture will share insights from behavioural research, reporting designs, and practitioner experience gained from working directly with certified Senior Managers and Conduct programme leaders in more than 300 Conduct-regulated firms including leading asset managers, insurers and banks – many of which are already more than three years into the Senior Managers regime.

• Find out where behavioural regulators get their ideas from: what factors drive their current agenda for Conduct and Culture control, and what forms of reporting will satisfy the regulators’ demands.

• Check your firm’s progress against others’ Conduct preparations

• As a Senior Manager, reduce your personal vulnerability in the face of Conduct and Culture questioning

• The difference between Conduct, Conduct Risk, and Culture; which forms of behavioural incentives and controls are best to use, and which to avoid?

• Which management practices at your firm unwittingly encourage misconduct? How can the firm identify and prevent them?

• Where can one find the new information that the firm needs for Conduct and Culture reporting? Which time-wasting forms of reporting should we abandon?

• Find out how to your firm can gain value and resilience by tapping into a vast, under-used Culture asset that is already in place

• Discover simple ways to foster spontaneous good Conduct and Risk Culture in every part of the business.

• Learn from the successes and failures of other firms’ experiences in preparing for Conduct and Culture reporting – including the banking sector, where much of this reporting has been in place since 2017.

• Take two large steps towards readiness to show your personal grasp of Conduct and Culture reporting, in the everyday context of your firm.

• Know which forms of MI to deploy for best evidence of Conduct and Culture ‘fitness’ – both to satisfy regulators and to motivate staff to engage in supporting good Conduct and Culture.

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