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Good leadership - culture, ethics and conduct in financial services


Publication date:

15 December 2016

Last updated:

18 December 2023

CII and CMI report on the role of senior leaders in developing good culture and behaviours within financial services.

Managers in the financial services sector leave their ethics at home, meaning many companies continue to have management cultures that run the risk of unethical practice, according to a new report from CMI and CII.

Good Leadership examines the challenges of creating and sustaining ethical cultures at a time when the status of the UK's financial services sector as a global leader is threatened by political and economic uncertainty.

Analysis by MoralDNA™ for the report shows that financial services leaders suppress empathy and are up to one third less concerned with the impact of ethical decisions on people than other employees. Managers' sense of ethical care for others is stronger at home than at work.

The report finds: "While those in financial services will try to comply with the rules and consider principles in their decisions and behaviours, they are less concerned about good outcomes their customers, their stockholders and other stakeholders. The question is whether this is the culture that regulators and firms really want."

Drawing on previous work by the Chartered Management Institute and the Chartered Insurance Institute, the report also features contributions featuring Nick Leeson, the original rogue trader, on his perceptions of the culture in financial services institutions today; Prof. Roger Steare, Corporate Philosopher in Residence of Cass Business School and founder of MoralDNA™; and Ian Muir of Keeldeep Associates, a senior leader and business author; plus a case study interview with a senior leader in a major wealth management fund.

Key Recommendations

The report calls for financial services to provide 'good leadership' through 9 key steps:

  1. Discuss and re-define the business's values
  2. Ensure clear leadership on the values - set the tone from the top
  3. Upskill employees to help them understand what behaviours are acceptable
  4. Build a commitment to professional standards into staff development from the start of your career
  5. Engage with the spirit of regulation, rather than resentfully box-ticking
  6. Reward and recognise ethical behaviour
  7. Cultivate diversity through recruitment and promotions
  8. License people to discuss difficult issues without recriminations
  9. Constantly review and communicate ethical principles to employees

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This document is believed to be accurate but is not intended as a basis of knowledge upon which advice can be given. Neither the author (personal or corporate), the CII group, local institute or Society, or any of the officers or employees of those organisations accept any responsibility for any loss occasioned to any person acting or refraining from action as a result of the data or opinions included in this material. Opinions expressed are those of the author or authors and not necessarily those of the CII group, local institutes, or Societies.