“The pace of cultural change and lack of diversity at senior levels remains a matter of concern.” Speeches at conference on financial sector culture.
25 October 2018
Press Release
- Conference focused on culture and diversity in the financial services sector in Ireland
- Derville Rowland: “The responsibility for culture rests with the board and it’s on you when the culture in your organisation fails”
- Ed Sibley: “The pace of cultural change and lack of diversity at senior levels remains a matter of concern.”
Read Derville Rowland's speech
Read Ed Sibley's speech
In speeches to a conference, “Culture, Diversity and the Way Forward”, at Trinity College Dublin today, the Central Bank set out its expectations for the boards of banks and other financial institutions to ensure that a consumer-focused culture is embedded in their organisations.
The conference is jointly hosted by the Central Bank and the Trinity College Dublin School of Law.
In her comments Derville Rowland, Director General, Financial Conduct said culture should be driven by institutional standards such as fairness, respect, integrity and honesty. These standards should be promoted from the top down, echoed from the bottom up and be visible throughout the organisation.
She said:
“My message to board members – both executive and non-executive – is this: responsibility for culture rests with the board and it’s on you when the culture in your organisation fails and results in consumer detriment.”
“The board must not be blind to issues that senior management chooses not to bring to its attention, rather the board must insist that the correct information is made available to it. In short, the board must ensure that the organization is not just talking the culture and conduct talk, but walking the talk as well.”
“A lack of accountability is widely seen as a key driver of misconduct and therefore we are recommending individual accountability measures to drive better behaviour.”
She noted that the Central Bank is recommending to government that a Senior Executive Accountability Regime be implemented through legislation. This would place obligations on firms and senior individuals to set out clearly where responsibility and decision-making lies for their business.
In his keynote address, Deputy Governor Ed Sibley emphasised that the starting point for operating in a regulated environment is compliance with the rules and regulations that govern the industry. He outlined that the Central Bank will continue to focus on regulated firms’ cultures and diversity as part of an intensive and intrusive approach to supervision.
On diversity, he cited evidence of progress in some firms but noted that much more remains to be done. He said:
“There is an acute lack of diversity in those senior roles that are central to how firms make their decisions, set strategy, determine risk appetites and treat their customers.
For example, in the five years to the end of 2017, men had been appointed for more than nine out of 10 of the most influential roles in the retail banks.
More needs to be done to reduce the likelihood of groupthink, reduce overconfidence, improve decision-making, increase the level of internal challenge, improve risk management, and reduce excessive resistance to external challenge.”
Deputy Governor Sibley noted that it is undoubtedly the case that the standards of governance and risk management in financial services firms have improved in the last decade. This has been driven by the strengthening of the regulatory framework and the intrusiveness of supervision. However, the lack of cultural change and lack of diversity at senior levels remains a matter of concern.
He went on to outline practical steps that firms should be taking to improve their culture, and in doing so improve trust in the system.
Truly serving the needs of the economy and consumers over the long term not only requires learning from and addressing the sins of the past, he said. It also requires the foresight to address the challenges of the future.
Notes to editors: