If you’re planning to advance your banking and finance career, you need a strong understanding of professional conduct and ethics. Adopting standards and good banking practice is an essential part of mitigating operational risk – especially in the fallout from the Covid-19 pandemic. Rob Thompson looks at some of the key areas that bankers need to consider.
Regulation and governance in banking and finance
Since 2016, the FCA’s Senior Managers and Certification Regime (SMCR) has been in operation for banks and has applied to all FCA-regulated firms since December 2019.
SMCR requires all staff – except for those in ancillary roles – to adhere to the FCA’s Conduct Rules.
In many respects, the rules require senior management to take responsibility for the behaviour of other people in their banks or advice firms. And they require firms to notify the FCA when rules are breached.
Over the years, although not under SMCR, the FCA has fined several financial institutions for market abuse, lack of due diligence, and fitness and propriety among other misdemeanours.
In the most serious cases, individuals have been disbarred from working in the financial services industry.
And of course, the stories behind these infringements and the individuals involved have often been high profile – adding reputational damage to the cost.
A duty of care to vulnerable customers
The economic upheaval of the Covid-19 pandemic means bank staff have to support increasing numbers of vulnerable customers – both businesses and private individuals. Many are facing financial hardship for the first time.
During the pandemic, retail banks have also had to work hard to protect customers from an increased volume of phishing and scams.
Customers rely on banks to help protect them against fraud and deal with any losses. And the banking industry has been credited for stopping £1.6bn of fraud in 2020.
However, the problem persists, which is why financial institutions must ensure they’re always acting with due diligence.
Banking can help solve world problems
Traditionally, the responsibility to support communities, society and local economies has been a big part of a banker’s role. In the 21st century, that aspect of a banker’s role is becoming ever more complex.
The banking and finance sector is increasingly at the forefront of the drive to tackle world problems, from fighting pandemics to addressing climate change.
In the post Covid-19 world, our industry will be tasked with helping society move forward and rebuild after Covid-19. There will be an increasing number of tricky decisions and judgement calls.
Banks need leaders who shape organisational culture
Much of the current regulation – including SMCR – was introduced to encourage a sense of personal responsibility among bankers and finance professionals. Leaders and managers in banking need to lead by example as well as instil good conduct among more junior staff.
That means embedding a culture of solid values in an organisation to promote integrity, fair treatment of customers, proper standards of market conduct and more.
So banks need people who don’t just understand the FCA’s Conduct Rules, but who can appreciate their complexity and the consequences of not adhering to them.
They need people who can explore their own personal professionalism, professional identity and accountability within the finance sector. They need people with a solid grasp of why ethics matter and can ensure compliance with rules and regulations.
Values are of course important, but so too is ethical thinking, theory and practice and the knowledge of how that applies to the financial services industry.
In this ever-changing world with a much less predictable future, personal professionalism can only become more important.
Find out about the Level 5 Professionalism, Conduct and Ethics (5PCE)