Recommendation 4

HM Government Acknowledged

Charles Randell and I are committed to ensuring the FCA implements all nine of the recommendations from Dame Elizabeth’s report,2 and the FCA Board and the Chairs of its Audit and Risk Committees provide independent oversight of this work. As Charles’ letter3 to the Economic Secretary to the Treasury set out, we aim to have completed the measures required to meet Dame Elizabeth’s recommendations by the end of the year, and we remain on course to do so. On 15 July, we published a detailed update4 on progress in implementing the recommendations to date. Beyond this update, Charles also explained that implementing the recommendations would deliver only some of the transformation that the FCA’s Board and I view as necessary to ensure the FCA regulates firms in a more agile, more targeted and more effective way. Our Business Plan for 2021/225 lays out the need for, and extent of, our ambition to become a regulator which: • Sets the bar high to support market integrity and sustainable innovation • Guards entry to markets by having a more robust gateway for new firms, so firms have high standards at the start and maintain them as they grow • Finds issues and harm faster through use of all available intelligence, supported by investment in new technology and approaches • Tackles misconduct to maintain trust and integrity • Enables consumers to make informed financial decisions • Is more proactive at the boundaries of the perimeter • Works with other organisations so we achieve more 2 Letter from the FCA Chief Executive to the Chair of the Treasury Committee, 11 May 2021 3 Letter from the FCA Chair to the Economic Secretary to the Treasury, 16 April 2021 4 Implementing the recommendations from the Independent Reviews - update, Financial Conduct Authority, published 15 July 2021 5 Business Plan 2021/22, Financial Conduct Authority, published 14 July 2021 12 Second Special Report of Session 2021–22 Alongside changes to processes and systems, our Transformation programme is also about investing in our people and reshaping our culture. To achieve our best, we need to create an environment where we are ready to respond rapidly to challenges and are empowered to act. I welcome the Committee’s recognition that a transformation of such scale will take time. I expect that comprehensively and sustainably delivering the cultural change necessary to realise the goals I set out above will take up to three years. Throughout this period, as our work in response to Dame Elizabeth’s recommendations illustrates, we are prioritising the implementation of key initiatives at pace. What I will set out here is how we will translate those initiatives into lasting improvements in our culture. The FCA Board has set six cultural objectives for our organisation, and we will define the measures by which we will assess ourselves against them. These objectives are central to becoming the regulator we need to be, and each delivered or planned milestone of our Transformation programme marks progress in service of them. For example: • Being more outcome-driven: We have introduced a new process for assessing and managing the performance of our people, focusing on developing talent and raising standards across the FCA. The performance goals I have set my leadership team, and which cascade throughout the organisation, place greater emphasis on measurable outcomes. • A more diverse, flexible and inclusive workforce: We will continue to publish our progress against our D&I targets6 and–in seeking to represent the society we serve more fully—will establish presence in Belfast and Cardiff by the end of the year, double our headcount in Edinburgh over the next two years, and are also exploring opening an office in Leeds. We expect to make substantive progress on the latter by the end of 2022. We have previously set targets for gender and ethnicity for our senior leadership; we are now also setting targets for our manager, technical specialist and senior associate grades. Additionally, we announced our intention to operate a ‘hybrid’ of home- and office-working, with trials underway to test how this can be most effectively implemented. • Joint working and collaboration: I have previously set out to the Committee the bringing together of our supervisory and policy-making teams, and with new members of the leadership team now in place,7 these new divisions are now fully operational. But beyond sharing inputs and opinions, collaboration also entails re-deploying resources and spreading workload effectively with mobility between teams. Later this year, we will carry out a formal employee consultation on measures to simplify our employee pay and grading structure in order to support this mobility within a high-performance culture. Our Business Plan for 2021/22 also highlights the importance of working with partner organisations, and that very few of the issues we face can be dealt with by one agency alone. The most harmful behaviour, like fraud, often occurs acro