An Overview of Conduct Risk
How Does Conduct Risk Manifest and What Are Its Root Causes?
What Are the Driving Forces of and Who Owns Conduct Risk?
Scope and Ownership within the Business
Conduct Risk in Financial Services: Lessons from the Hospitality and Leisure Industry
Ethical Culture: What, Why and How?
Language and Conduct Risk: Limited Language – Big Blind Spots
An Anthropological Perspective on Conduct Risk
Identifying and Measuring Conduct Risk
Risk Appetite Setting and Modelling Conduct Risk
The Effect of Conduct Risk Losses on Reputation
Bringing the Customer Back to the Foreground: The End of Conduct Risk?
Managing Conduct Risk
Closing Comments on the Future of Conduct Risk
It could be said that the reputation of the financial services industry has not truly recovered from the lows of the 2007/8 crisis, and the trust that was lost after the government-backed bailouts of banks has not yet been restored.
This book outlines a number of conduct scandals that have occupied the news, such as the mis-selling of mortgage-backed securities and payment protection insurance (PPI), rate rigging of the London Interbank Offered Rate (Libor) and foreign exchange markets, to rogue trader events. At the time of writing, news had just broken of an impropriety at the large US bank Wells Fargo. Allegedly, an estimated two million falsified customer accounts were created without customers knowing, in order to hit sales targets. A fine of US$185 million had been issued, and around 5,300 employees had been fired, and the CEO resigned (Egan 2016).
In the light of such failings, the Dodd–Frank Act in the US merged consumer protection under a new Consumer Financial Protection Bureau in 2011 and the UK dismantled the Financial Services Authority (FSA) in 2013, implementing a new conduct-focused regulator called the Financial Conduct Authority (FCA). These new organisations