A recent speech from Marc Teasdale, the FCA’s Director of Wholesale Supervision - Supervision Investment, Wholesale & Specialists Division makes it clear that asset managers need to focus on achieving good governance and a purposeful culture – with diversity and inclusion efforts playing a key part in this.
Mr Teasdale noted that the FCA’s regulatory interventions in the asset management sector, such as the Asset Management Market Study remedies, and continuing work on governance and conflicts of interest, are intended to more closely align the sector with its essential purpose of protecting and growing the capital and income of its customers over the long term.
The FCA believes that firms with healthy cultures demonstrate strong governance that supports the daily delivery of their essential purpose. This is particularly true of the asset management sector, where strong governance is needed to appropriately address the conflicts of interest which, if unaddressed, have the potential to cause significant harm to investors.
The FCA considers that a meaningful focus on diversity and inclusion is essential both for strong governance, and to ensure that firms deliver on their purpose for all sections of society.
Mr Teasdale observed: “If the basic purpose of the asset management industry is to act in the best interest of investors, that must mean all investors, irrespective of their gender, ethnicity or other characteristics. How far has D&I within your firm progressed from a discussion about staff to a discussion about your customers, and how far do you view your purpose in this way?”
Firms will need to be prepared to answer these challenging questions and must prioritise their efforts in these areas.
In our experience, purposeful firms are therefore more likely to have a culture that produces beneficial outcomes for consumers and markets. It therefore also follows that it is essential that purpose is not just a slogan on a brochure, or above the head-office reception, but can be seen manifestly in the choices that a firm and its employees make day in, day out, at all levels.