Trustee and Fiduciary Services Global Asset Management Industry Insights

Global Asset Management Industry Insights 11 WHERE NEXT FOR CULTURE AND CONDUCT GOVERNANCE? Over the last few years, the connection between culture, conduct and personal accountability has grown stronger from a regulatory perspective. The first regime to be implemented was in the UK in 2016 and others have been seen more recently in Hong Kong, Singapore and Australia. Other countries too, such as Ireland, are looking to introduce their own version. But this is without doubt a global trend, as recognised by the Financial Stability Board, which published a “Toolkit for strengthening governance frameworks to mitigate misconduct risk” on 20 April 2018. The toolkit identifies 19 tools that firms and supervisors could use to mitigate cultural drivers of misconduct, strengthen individual responsibility and accountability, and address the rolling bad-apples phenomenon. At a global level, this represents a multifaceted approach to treat one of the root causes of the global financial crisis. Perhaps given where firms are now in this cycle, it isn’t surprising to see that only 4% of respondents think further legislation is necessary, with 45% believing further guidance would be more useful and a decisive 51% believing cultural change should be driven internally by firms. This is also a reflection of the belief, stated by numerous regulators, that just as there is no such thing as an ideal organisational culture, there is no single way that can be prescribed for firms to improve their culture. There’s no one-size-fits all approach to culture, but can it only truly be driven from within? Q5 51 % Should be driven internally by firms 4 % Would welcome more legislation in this area 45 % Guidance would be more useful It’s a welcome trend that firms are looking to take greater ownership over the way they improve conduct within their organisations. But for those jurisdictions and those senior managers where personal accountability is in place or will be shortly, the clock is ticking.