Mr Adamson criticised the FSA's failure to stop firms from viewing customers as somebody from whom to maximise profit, rather than firms selling products with customers' needs and interests in mind. Mr Adamson said that this was exacerbated by a view that disclosure at the point of sale absolves the seller from the real responsibly of ensuring that the product or service represents a good outcome for the customer. He went on to say that this has led to a "tick-box and overly legalistic compliance culture" within firms. Mr Adamson described a firm's culture as being akin to its "DNA".

Mr Adamson said that changing the culture of a firm can be difficult as it tends to be deeply embedded. However he stated that it is possible to identify some key drivers to firm culture, including:

  • setting the tone from the top;
  • translating this into easily understood business practices; and
  • supporting the right behaviours through performance management, employee development, and reinforcing through reward programmes.

According to Mr Adamson, the FCA will assess culture by observing:

  • how a firm responds to, and deals with, regulatory issues;
  • what customers are actually experiencing when they buy a product or service from front-line staff;
  • how a firm runs its product approval process;
  • the manner in which decisions are made or escalated;
  • the behaviour of that firm on certain markets; and
  • the remuneration structures.

Mr Adamson explained that the FCA would look at how a board engages in those issues, including whether it probes high return products or business lines, and whether it understands strategies for cross-selling products, how fast growth is obtained and whether products are being sold to markets they are designed for.

Mr Adamson noted that the FCA does not have direct rules about culture, although it is partially analogous to the FCA's high-level principles for business. However, Mr Adamson does believe that as culture and business practices are vital in driving behaviours, the FCA wishes to encourage positive culture change in firms. The FCA will therefore increasingly draw conclusions about a firm's culture and reflect that back to firms as part of the risk assessment process.

Mr Adamson also mentioned the Retail Distribution Review as having set new professional standards and, in addition, the FCA will be placing greater emphasis on both individual and corporate accountability.

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