If you would like to receive more of news and insights from our team sign up here.
“Conflicts of interest were allowed to range unchecked”
This is one of the more flattering comments which Andrew Hauser made in a speech about wholesale finance markets in recent times. The Bank of England’s Director of Market Strategy pulled no punches when he described a market place which was somewhat akin to the ‘wild west’ with collusion, misuse of private information and market manipulation being rife within the sector.
Whilst supervision and fines have gone some way towards addressing the immediate problem, they are only an interim measure as regulators seek to move firms away from the destructive patterns of the past. Accordingly, Mr Hauser reemphasised the importance of ensuring that “new structures being put in place to manage conduct are aligned with the business, and not in some sense parallel to, or outside of, it.”
However he does counsel about the danger of an initial impetus towards change fading away. To counter this he suggests that effective market disciplines are re-established and that “conduct risk management is intimately aligned with (indeed, arguably identical to) the successful running of the business.” Successful change requires determination and understanding throughout organisations; from the leadership setting and benchmarking appropriate behaviours to the traders on the floor assimilating conduct models which are aligned to fair practice.
In this the Fair and Effective Markets Review will play its part, as will the regulatory bodies in their turn, but at the end of the day unless organisations take active steps to change their cultures then they will remain tied to the shackles of the bad old days in which ‘Caveat Emptor’ was interpreted as ‘anything goes’.