Those who fail to learn from history are doomed to repeat it.
At the FCA’s recent enforcement conference Tracey McDermott, the FCA’s head of enforcement, explored how the lessons of the past could help to guide the financial services sector towards a better future. Along the way she touched on the fact that an analysis of errant firms had brought up the same responses time and time again. These included:
- Misconduct was described as being the work of a few individuals
- That these people had acted contrary to the standards of the firm
- That lessons had been learned and changes made
- That it wouldn’t happen again
But as Tracey McDermott pointed out, lessons had not been learnt and cultures are only now starting to slowly change for the better. Interestingly one of the key reasons given for the lack of swift response was the fact that leaders put a very narrow and literal interpretation on findings. For example, lessons which could have been learnt from the LIBOR scandal were ignored as being specific to LIBOR rather than leaders asking themselves whether the culture which gave rise to that scandal may also be present in other areas.
Tracey McDermott acknowledged that cultures were starting to change but that until those in the front line own and buy in to the change it won’t happen “no matter how many fine words there are from those at the top.” Ultimately, it is down to the leaders to set the culture, to inspire hearts and minds in a new belief set which values customer care and the ethics of doing what is right.