Emily Shepperd, Chief Operating Officer and Executive Director of Authorisations at the FCA, delivered a speech on 28 November emphasising the importance of culture to good conduct. The speech builds on a key theme for the FCA, setting it within the context of the new Consumer Duty and the opportunities and risks posed by innovation such as AI. 

Points to note included:

• The concept of culture as the personality, habits and ethos of an organisation.
• The FCA’s own ambitions to lead by example: it cares about culture because culture informs conduct and “that is what we regulate”.
• The FCA expects firms to collect data on the diversity of their staff, actively monitor it with interest and take bold action where needed.
• The Consumer Duty is seen as one of the biggest policies unveiled in recent years and one that will do the most to address conduct and therefore culture.
• The speech cites “understandable resistance” from some firms when the Consumer Duty was first discussed, mainly because it requires “enormous cultural and operational change”.
• New tools like AI can lead to better, more accurate pricing and products better suited to consumer needs, but also pose risks, including from a governance perspective. The governance limb of ESG is often overlooked.
• The FCA wants to support innovation (for example, in the crypto sector) but not at the cost of consumers or market integrity. A collaborative approach has helped the FCA understand how the crypto sector works and the sector to understand the FCA’s expectations.
• Only 5% of cryptoasset business applications to the FCA for registration under the MLRs were of high quality and showed an understanding of AML rules, but the FCA was able to engage with many others to address concerns about capability, business models and controls.