The financial services (FS) industry has faced scandal after scandal, particularly since the global financial crisis. These have had costly consequences in more ways than one. Many FS firms have paid multimillion-pound fines or reached significant settlements with regulators over the shortcomings in their financial crime risk management. Between January 2011 and December 2019, £38.3bn was paid to customers who complained about the way in which they were mis-sold PPI. Some individuals have even faced criminal charges for their part in the manipulation of interest rate benchmarks. Such events all result in reputational damage for the institutions involved.
In recent years, the industry has made significant efforts to reform and improve conduct in line with both specific regulations (e.g. the Senior Managers and Certification Regime) and principles from regulators (e.g. for conduct risk management). However, we have still seen scandals occur ‒ and compliance costs continue to increase. Indeed, by early 2020, two thirds of FS firms in the UK still expected the time and resources devoted to improving their conduct to increase over the coming year.
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