As the FSA's chief executive Hector Sants, said at the CISI's Annual Conference "A firm's culture plays an important role in influencing the actions and decisions taken by individuals within firms and in shaping a firm's attitude towards their customers. The regulator's focus should be on what an unacceptable culture looks like."
In this context the FSA's recently issued CP 10/12 on competence and ethics is very timely and is the start of the journey in raising firms' and individuals' understanding of the importance of competence and ethics.
CISI members at the recent CISI Annual Conference, indicated that they support the strengthening of the Principles for Approved Persons as part of the FSA's focus on ethics, with 18% "strongly" agreeing and 43% agreeing "on balance". However CISII believes it is important for there to be practical guidance on these changes to the Principles since they are in general words unlike the other descriptions of unacceptable behaviour in the Principles.
Simon Culhane, chief executive of the CISI, said " We are delighted that the FSA and Hector Sants have given such a clear message on its direction of travel to the senior management of both retail and wholesale firms on the meaning of the ‘competent employee' rule for all their staff. Placing the responsibility on senior managers for ensuring their staff have the ‘right culture', and on individual senior managers for the training and competence of their staff, shows how important this is for consumer protection and firms' reputations. The paper also shows that the FSA really does as Hector Sants recently said ‘do ethics'. This is a step change in the FSA's interest in these matters under its ‘intensive and intrusive' supervision of firms and individuals."
