As we all know, ill-advised risk taking in the financial sector led the industry to the brink of collapse in recent years. Not only that, but sales schemes driven by inappropriate incentive plans and outlandish short-term objectives caused many consumers to suffer severe financial consequences and lose trust in the entire financial marketplace. It seemed as though the customers, whether individual borrowers or institutional investors, became mere pawns in a chess game played by bankers willing to sacrifice them for a big win. Something was desperately wrong with conduct in the banks, and it needed to change.
Such was the genesis of the U.K.’s new Financial Conduct Authority (FCA) which was formed to address the protection of both customers and the financial markets as a whole. In a recent speech to the Association of Professional Compliance Consultants, Clive Adamson, FCA director of supervision addressed the need for change to address conduct risk in this way:
