Preparing for Conduct Reporting and Culture Audits

From 2019, every Senior Manager in every UK regulated financial firm must be able to give sound answers to new questions from behavioural regulators, about the state of their firm’s Culture of service and the Conduct controls that support it. An enforcer can now ask managers, and indeed front-line staff, to explain directly how their own personal behaviour is ‘acceptable and expected’. Those who cannot respond face punishment for failing to take reasonable steps to prevent detriment to clients.

A firm’s commercial value and continued existence will soon depend on satisfying this type of ‘Culture Audit’ question from regulators, probing 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 reporting 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”.

Not only do firms have to formally prove their competence and show active steps they are taking to manage Conduct and Culture. Managers need to understand the essentials of behavioural reporting, with dedicated frameworks for behavioural risk, culture audit reports and conduct evidence dashboards. Firms must prepare all staff to answer frankly (and coherently) 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 new regulatory hurdle to overcome but with the right approach, by concentrating on the right internal priorities, firms can achieve this. Chief among these is to stop treating Conduct and Culture simply as Compliance challenges, but to embrace the Conduct agenda as a positive opportunity to build business value and resilience in the firm. At this event, one of the UK’s foremost specialists in Conduct and Culture will share insights from practitioner experiences, behavioural research, and new reporting designs, gained from working directly with certified Senior Managers and Conduct programme leaders in more than 300 Conduct-regulated firms: asset managers, brokers, credit providers, insurers, and banks*.

Seminar Content

• Where behavioural regulators get their ideas from: the sources and factors drive their current agenda for Conduct and Culture control – and how firms’ reporting can best respond to satisfy regulators’ expectations
• 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
• What’s the difference between Conduct, Conduct Risk, and Culture, and why does it matter?
• Which forms of incentives and controls work best, and which should you avoid?
• What are your managers doing that encourages misconduct, without their realising it? How can your firm identify and prevent these patterns of behaviour?
• Where can you find the “new MI” (sources of reporting information) that your firm now needs for Conduct and Culture reporting? Which of your old forms of reporting should you abandon as time-wasting?
• How your firm can build value and resilience by tapping into an existing, vast but under-used Culture asset
• 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 – notably banks, which have been active in behavioural (SMR) reporting since 2017.
• In two steps, get ready to show your personal grasp of everyday Conduct and Culture tracking and reporting.
• Which forms of MI to use to best prove ‘fitness’ in your firm’s Conduct and Culture – to satisfy regulators and to motivate staff engagement.
• Dr Miles’s latest research among senior bankers (publication: February 2019) quotes directly their personal experiences of three years under the Senior Managers regime.