Taking notice of risk culture – the regulator’s approach

Ring, Patrick John; Bryce, Cormac; McKinney, Ricky; Webb, Rob

Abstract

Following the financial crisis and a series of mis-selling and ‘rigging’ scandals in the financial services, organisational culture, and particularly the risk culture of organisations, has come to be regarded as a key issue for both financial firms and their regulators This paper considers the extent to which regulatory published notices, ‘Final Notices’ (FNs), relating to breaches of the regulatory Handbook, are able to provide lessons, or pointers, in the development of ‘appropriate’ cultures. By undertaking a qualitative content analysis of all the FNs in 2012, we examine the extent to which FNs draw attention to issues of culture, and to the regulator’s analysis of the drivers of culture published as part of its treating customers fairly (TCF) initiative. The analysis finds that, although not easy to extract, there are important learning points in FNs relating to organisational culture, and in particular to the factors driving behaviours and outcomes that are signs of poor culture. This paper suggests that, whilst it may not be for a regulator to dictate firms’ culture, it could do much more to make use of the content of FNs as a learning tool for firms; particularly in the context of its cultural framework for TCF. This would support the ‘outcomes-based’ approach being espoused by the UK’s regulators.

Citation

Ring, P. J., Bryce, C., McKinney, R., & Webb, R. (2016). Taking notice of risk culture – the regulator’s approach. Journal of Risk Research, 19(3), 364-387. https://doi.org/10.1080/13669877.2014.983944

• Journal Article Type: Article
• Acceptance Date: Sep 27, 2014
• Online Publication Date: Dec 6, 2014
• Publication Date: Mar 15, 2016
• Deposit Date: Feb 26, 2019
• Publicly Available Date: Feb 28, 2019
• Journal: Journal of Risk Research
• Print ISSN: 1366-9877
• Electronic ISSN: 1466-4461
• Publisher: Routledge
• Peer Reviewed: Peer Reviewed
• Volume: 19
• Issue: 3
• Pages: 364-387
• DOI: https://doi.org/10.1080/13669877.2014.983944
• Keywords: risk culture, Final Notice, treating customers fairly, content analysis, Financial Conduct Authority
• Public URL: https://nottingham-repository.worktribe.com/output/1584652
• Publisher URL: https://www.tandfonline.com/doi/full/10.1080/13669877.2014.983944
• Additional Information: This is an Accepted Manuscript of an article published by Taylor & Francis in Journal of Risk Research on 06/12/2014, available online: http://www.tandfonline.com/0.1080/13669877.2014.983944
• Contract Date: Feb 26, 2019