Taking notice of risk culture – the regulator’s approach

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

*Corresponding author for this work

    Research output: Contribution to journalArticle

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    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.
    Original languageEnglish
    Pages (from-to)364-387
    Number of pages24
    JournalJournal of Risk Research
    Volume19
    Issue number3
    Early online date6 Dec 2014
    DOIs
    Publication statusPublished - Feb 2016

    Keywords

    • risk culture
    • financial services
    • organisations

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