Sex (ism) and the City: can new regulations root out the bad apples?
As the FCA and PRA prepare to crack down on improper conduct in ‘the City’, what would Carrie
Bradshaw make of the regulators’ latest attempt to promote healthy culture, and root out the bad
guys? Jennie Clarke asks
Over 25 years ago, Carrie Bradshaw and her friends – Samantha, Charlotte, and Miranda – debuted on TV, quickly rising to be one of the most infamous series ever made.
Sex And The City caused controversy as it set out to break down stereotypes and tackle some of society’s biggest issues at the time. Despite first airing in 1998, recent high-profile cases serve to show that many of the controversial issues raised at that time continue to persist in the City. Over the last few months, the news has been awash with senior leaders and chief executives who have abused positions of power.
This week the FCA and PRA published their joint Consultation Paper aimed at improving diversity and inclusion in the workplace. The proposals look to implement more stringent fitness and propriety measures within financial services, as well as setting out that the FCA is “taking a clear stance that non-financial misconduct, such as sexual harassment, is misconduct for regulatory purposes”. The proposals recognise that a lack of diversity and inclusion within a firm is a “non-financial” risk.
Regulators have been circling the issue of company culture for some time. In June, the FCA’s Therese Chambers, encouraged those within financial services to “do the right thing when nobody is watching”.
FCA COO Emily Shepperd warned firms against the “repeat recruitment of bad apples”, while Christy Goldsmith Romero , of the Commodity Futures Trading Commission, proclaimed that “the tone at the top dictates a bank’s culture and that tone must change”.
It takes only one bad apple to turn a workforce from safe to scandalous. Carrie, Miranda, Charlotte and Samantha went on plenty of bad dates on their journey to finding “the one”. In perhaps a slightly tenuous link, the quest to find “the one” is not too far removed from increased regulatory expectation to root out “bad apples”.
Regulatory expectation suggests that firms must ensure they conduct rigorous vetting for staff at all levels.
Understanding the true meaning of communication played a pivotal role in the Sex and the City cast’s pursuit of love, with the friends frequently hoping to decode messages to understand the true sentiment of their love interests. Compliance officers may have some sympathy here – while not tasked with decoding “love languages” necessarily, they are expected to consistently monitor business communication to decode messages and mitigate risks.
Bad culture within an organisation is often the result of the poor conduct of individuals. Oftentimes, this poor conduct will take place in plain sight – through IMs, email, or phone calls.
By leveraging communications surveillance tools, firms can continually monitor what teams are saying to one another, and, should inappropriate terminology be used, an alert will be flagged to compliance teams so that they can investigate whether this is a case of wrongdoing or the potential beginnings of misconduct.
While it’s not a silver bullet, communication monitoring can go a long way to spotting bad behaviour at inception, before it escalates.
And just like that, I realised that we had a long way to go to create a healthy work culture – but there are ways to mitigate the risks and root out the bad guys.