Monday 5 August 2019 2:43 pm

Watchdog says 'bad apples' still able to find new jobs in financial services

Financial services employees with poor conduct records are still able to move to new companies, despite efforts by the regulator to improve conduct in the sector.

A review by the Financial Conduct Authority (FCA) found that “rolling bad apples” continued to be an issue in the sector, despite the introduction of new tougher regulations.

The FCA’s senior managers regime, introduced in 2016, aimed to clean up the finance sector after banks were fined billions of pounds for trying to rig interest rate benchmarks and currencies.

Read more: Financial Conduct Authority ups scrutiny on senior manager appointments


The regime aims to make senior staff at finance firms directly accountable for their actions.

In its review of the regulations, the FCA found that “the majority felt that the industry had some way to go to improve the quality and timeliness of references. Another challenge for firms is that other firms are not always consistent in recording breaches of the conduct rules.”

The FCA said its research found that changes driven by the new regime and by factors such as past conduct issues had improved behaviour within firms.

“Many firms described a stronger tone and ownership from the top. They told us that there was now a change in the level of detail, clarity and quality of conversations on culture and expected behaviours,” the FCA said.

The FCA said that the regime is having an impact on senior managers. 

Read more: The number of people banned from the financial services sector rose 28 per cent last year

“Firms told us that the regime is having an impact on the mindset of senior managers,” it said.


However, the watchdog said that measuring culture was still proving difficult.

“Firms have found it challenging to find appropriate ways of measuring culture and the effort to do so is continuing,” it said.

Rob Moulton, financial regulatory partner at law firm Latham & Watkins, said: “The FCA’s general approach is as led by financial culture as it is financial conduct, and firms are clearly finding the less tangible aspects of culture harder to grasp and progress.”

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