UK COMPLIANCE HANDBOOK UPDATE: Culture, values and ethics

If the culture of firms was ever to be tested, the events of 2020 and the COVID-19 pandemic have given firms such an opportunity.

With an almost overnight move to remote working practices for most firms, regulators have been at pains to describe the type of good conduct they are expecting in these tumultuous times, both from employees and senior managers alike. For the most part, firms have risen to this challenge and good practices have been widely reported, although in some areas the regulators have already raised an eyebrow. A post-crisis review will have to determine if firms have learnt their lessons from previous events.

For instance, the Libor (London Interbank Offer Rate) scandal, which took hold in 2012, led to regulators in New York, London and Asia announcing that they would investigate, prosecute and take enforcement actions against several major banks for rigging Libor.

The conduct of bankers was in the spotlight, but this time the focus was on systemic failures of culture, values and ethics.

As they were hauled in front of parliamentary and congressional committees, chief executives and chairmen struggled to define what the word “culture” means, let alone describe what good culture should look like.

In the aftermath of the 2008 financial crisis, the consequences of creating cultures driven by ego, greed and fear have been evident. The attention of boards may have turned to other hazards posed by new technology and the COVID-19 pandemic, but the lasting effects of the banking crisis continue to be felt. There remains an emphasis placed by regulators on embedding a sound culture, creating sustainable businesses and, more recently, clearly articulating the purpose of a firm.

In this chapter, Professor Roger Steare shows how clarity of purpose, leadership character, judgement and behaviour are crucial to the restoration and sustainability of the financial services industry. There is also a discussion by Ashurst LLP of how compliance professionals can help senior managers to make the critical changes in culture, values, judgement and behaviour that are now required.

The Thomson Reuters Regulatory Intelligence UK Compliance Handbook is a guide to certain key aspects of the Prudential Regulation Authority (PRA) and Financial Conduct Authority’s (FCA) rules. The handbook covers a wide range of subjects, from obtaining authorisation from one or both of the UK regulators, to discussing the requirements of the GDPR. Not all of the subjects are drawn from the PRA or FCA’s specific rules, but they are subjects about which compliance practitioners need to be aware.

The emphasis of the handbook is on providing compliance practitioners with an insight into the practical application of the UK regulatory requirements. Each chapter of the handbook is discussed in the statutory and regulatory context with practical analysis of the subject, together with practical tips and guidance which firms may find helpful.

The chapters have been contributed and edited by a team of compliance and legal practitioners. The handbook is updated regularly to reflect changes in regulatory policy or rules and changes in market practice. It will be of interest to all members of the regulated community, irrespective of industry sector or specialisation. The handbook can be used as a reference guide and as a training aid for those who are new to the compliance industry.

The UK Compliance Handbook is not an alternative to the PRA and FCA’s rules and guidance, nor does the UK Compliance Handbook provide specific or general advice on the application of, or compliance with the rules. If a firm requires advice or guidance of that nature, it should consult its lawyers or other professional advisors.

To find out more about Thomson Reuters Regulatory Intelligence and the Compliance Handbook:

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Susannah Hammond is a senior regulatory intelligence expert and joined our regulatory intelligence team from GE Capital Bank where she was head of compliance. Susannah has over 25 years’ wide-ranging experience in international and UK financial services.

A qualified chartered accountant, Susannah’s compliance career includes SG Warburg, Caspian Securities and PricewaterhouseCoopers. She was head of international regulatory risk for the Halifax Group and became head of retail regulatory risk for HBOS plc upon Halifax’s merger with Bank of Scotland.

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