help staff improve conduct

What support does your firm provide to help staff improve conduct?

By The Enforcd TeamThe Enforcd Team

In this 4th post in our series reflecting on Megan Butler’s speech to the FT Investment Managers Summit, we look at what support your firm provides to help staff improve conduct.

Ensuring good conduct across a corporation is essential.  Once you’ve established a strategy for good corporate conduct, how do you make sure that everyone across the organisation sticks to it?

In our last blog we talked about the importance of encouraging staff at all levels to feel engaged and involved with the task of improving company conduct. The obvious question leading on from this is how can they do this and what support should managers provide? It’s one thing to establish it as a principle but how it works in practice often depends on the support mechanisms in place.

A move towards accountability

The FCA is working hard to encourage greater accountability and conduct at all stages of the financial sector. This will place a greater emphasis on managers to improve their adherence to the rules throughout their organisations, but it’s not possible to do this without buy-in from everyone involved.

Key to this will be the support and education they provide to employees from the moment they arrive at the company to their day to day work. So, as part of her address to the FT Investment Management Summit Europe, Megan Butler of the FCA posed these questions.

  • Do your training and induction programmes, for example, lay out your expectations of colleagues?
  • Do you provide information and reporting, or enable committees to form and discuss issues?
  • Do you pause to look at the main initiatives being undertaken in your firm?

Key areas of conduct compliance will require good awareness of the issues among staff. One of the most critical in the digital age is cyber-security. A good IT security strategy is all well and good, but it can all too often be breached thanks to individual errors.

A member of staff, for example, might click on a phishing email, or may leave sensitive documents on their desk or take them home. Accessing a central system from an unsecured personal mobile device can also compromise endpoint security compliance.

Algorithms are also creating a number of risks, many of which would have been unforeseen. The rise of algorithmic trading has been welcomed by many as reducing conduct risk by eliminating the human trader. True, it does avoid behavioural risk, but depending on how they are designed and used, they do create several conduct risks, not all of which are easy to resolve. Identifying the route source of the problem can be difficult.

Support and guidance

Supporting employees to reduce conduct risk across an organisation starts at recruitment. From the very outset they should be given clear instructions about what the company expects of them in terms of their conduct. It is in the nature of employees to do their best to satisfy their employers. If they feel that their employer does not prioritise good conduct, they are likely to push it down their own agenda.

Ongoing support and education about the evolving nature of their regulatory requirements will also help maintain ongoing good conduct. Using services such as our Global Regulatory Intelligence Platform helps them to stay abreast of the regulations and to see where others have fallen foul of the regulators.

This screenshot, for example, shows a list of recent infringements. They can see where the individual or organisation failed to meet the standards of good conduct required and how they can incorporate those lessons into their own professional worlds.

Encouraging fair and sustainable conduct across an organisation has not always been a top priority for businesses, but it’s something that has to form a central pillar of every operation. Not only does it avoid fines, but it also contributes to a stronger and more sustainable company going forward.