Shearman & Sterling LLP | FinReg | Financial Conduct Authority Publishes Progress Report on Conduct Questions for Wholesale Banks
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  • Financial Conduct Authority Publishes Progress Report on Conduct Questions for Wholesale Banks

    The Financial Conduct Authority has published its latest report on industry progress made against the "Five Conduct Questions" it poses to wholesale banks in a bid to improve their conduct and culture. The FCA will use its findings to assess the impact that embedding good conduct is having on the wholesale banking market and to consider the potential for more sustainable mindset change. The report also includes strategic considerations that firms may address to improve their approach to conduct challenges and an assessment of whistleblowing initiatives in the wholesale banking sector. In particular, the FCA found that whistleblowing channels require improvement, and that non-financial misconduct (such as bullying, sexual harassment and other forms of personal misbehavior) is a significant problem across firms. The FCA continues to welcome face-to-face meetings with wholesale financial services firms to discuss thinking on all aspects of the report.

    The FCA introduced the Five Conduct Questions initiative in 2015 as a supervisory program designed to achieve effective reach and impact on conduct issues within the wholesale banking sector. The report provides a summary of the 2019 responses to the 5 Conduct Questions. The questions relate to: (1) the proactive steps firms take to identify conduct risks within their business; (2) the manner in which firms encourage employees to take responsibility for managing firm conduct; (3) the support in place to enable employees to improve conduct; (4) the manner in which Boards and Executive Committees oversee conduct and consider the conduct implications of strategic decisions; and (5) any activities undertaken by the firm that may undermine conduct.

    As of 2018, the program has been rolled out to a broader range of wholesale financial services firms including commodity traders, benchmark publishers, agency brokers and exchanges. The FCA intends to continue to engage with firms on the issues raised by the responses to the progress report.

    View the FCA's Progress Report.

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