Why are we talking about culture?
Opening remarks by Peter Kell, Deputy Chairman, Australian Securities and Investments Commission, AFR Banking & Wealth Summit 2016 (Sofitel Wentworth, Sydney) 5 April 2016
Thank you for inviting me to participate in the panel on culture and conduct risk.
Culture, and its links to conduct and regulation, has become central to discussions of how business operates, particularly in the finance sector. Given the massive global costs of misconduct arising out of poor finance sector culture, this should not be surprising.
ASIC has been highlighting the importance of culture in financial firms. Our aim is to promote trust and confidence in the financial system, and poor culture clearly undermines that trust and confidence.
We haven’t been the only regulator discussing this issue. In Australia, for example, APRA has also underlined the importance of culture and has indicated a strong focus on culture in its regulatory work. Overseas, the UK Financial Conduct Authority has said:
It is only through establishing the right culture that senior management can convert their good intentions into actual fair outcomes for consumers.
And it’s not just regulators. The most in-depth review of the Australian financial sector in recent times was of course the recent Financial System Inquiry (FSI), headed by David Murray. This inquiry highlighted the issue of business culture. Several of its key recommendations went to ensuring that both financial firms and regulators were better placed to address the problems we’ve seen in finance sector culture.