Over the past year there have been striking examples, across many national markets and sectors of the economy, of companies seeking to rebuild their reputation and the trust of their customers following a high profile incident or scandal. Within the financial services sector, we think that the regulators, both prudential and conduct, will be focussing on whether firms take concerted action to understand and, where necessary, improve their culture, including tackling cultural failings that have led to misconduct.
As our new report sets out, supervisors can be expected to scrutinise key areas including:
- the culture that is being driven by the board and senior managers;
- the degree of challenge permitted;
- the approach to incentives and accountability; and
- firms’ attitude to the supervisory process itself.
The judgements that supervisors reach in these and other key areas will strongly influence their overall assessment of a firm’s culture and, ultimately, their view of whether that firm is able to prevent similar misconduct in the future.
There is a message in here for any big company trying to shrug off a hit to its reputation: however much you may think you are done with the past, the past is not done with you.