Interpreting and adapting key principles to ensure that compliance is embedded into an organisation’s structure is vital to determining a business’ success. Although the key considerations may vary from business to business, most of these principles can be adapted.
A recent virtual speech, delivered by FCA executive director of enforcement Mark Steward, highlighted the importance of building a culture of compliance within the fabric of an organisation.
In his online address, Steward talked about how the FCA’s Senior Managers Regime (SMR) has changed the way UK firms allocate responsibilities, align those responsibilities to relevant controls, and ensure oversight of how these controls play out in practice.
Steward described how the FCA’s Five Conduct Questions (5CQ) start with tone from the top but increasingly focus on tone from within, requiring everyone across an organisation to be personally accountable and engaged.
Key principles such as the fair treatment of customers and ensuring the business is managed effectively allow for a strong professional relationship to be built between employer, employee, and consumer. Professionalism, expertise, and a focus on making the right decisions for customers, allow organisations to establish a solid reputation.
Leading by example
Workplace fulfilment plays a vital part in the cultivation of a company’s culture, with employee wellbeing becoming a major focus in many organisations. An article from Forbes reinforces that culture and compliance in the workplace go hand in hand; “Research shows that companies that focus on creating happy, healthier, motivating, and appreciative workplaces are onto something profound”. Essentially, employees who feel valued and respected within their company are more likely to reciprocate that behaviour and meet their performance goals which in turn aids productivity.
The strongest business leaders tend to be those who foster a culture of accountability by ensuring that all within that organisational structure operate to the same level of standards and expectations. One clear set of standards and expectations for all allows for transparency across all levels of the organisation and ensures that each employee knows exactly what is expected of them.
Within a culture of accountability, employees deliver results, and each are responsible for their actions. When a problem does arise, it is important for businesses to remember that learning from a mistake is far more valuable than assigning blame. An accountable workplace culture allows for growth and improvement. It serves as a buffer against negative experiences and stress which in turn improves employees’ ability to bounce back from any problems and challenges that have occurred.
Embedding behavioural change
Responding to questions from NYU’s Professor Arlen around how compliance can be embedded into the heart of an organisation’s operations, Steward explained that the (5CQ) are “great drivers” of a different approach because they require firms to think about behaviour at the point it might fail. The organisation must continue to run effectively even when the worst-case scenario unfolds.
The focus on an organisation’s point of failure aims to encourage greater awareness of consequences and any risks that could potentially cause a business to fail, which serves to promote better calculations of judgement from within the organisation. It is the responsibility of the organisation to ensure that employees have the information and procedures they need to respond to and recover from any incident whilst minimising business disruption and losses.
The changing expectations from the FCA around compliance and culture are increasingly important for organisations to understand. In short, organisations who develop positive cultures achieve significantly higher levels of organisational effectiveness — including financial performance, customer satisfaction, productivity, and employee engagement. The growing concern around culture and accountability at all levels within an organisation underlies the FCA’s thinking across from everything including SM&CR to diversity and inclusion.
We’re constantly updating our website and offer a variety of training solutions on SM&CR as well as assessments and full reporting facilities to ensure that firms meet the regulatory requirements. To discuss your requirements and enquire as to how we can tailor any of our courses to your individual needs, email: firstname.lastname@example.org
Extending the Senior Managers & Certification Regime