When I opened my morning paper and read that staff at the Financial Conduct Authority HQ had been condemned by their Chief Operating Officer for leaving liquor bottles in sanitary bins, abusing the cleaners, and defaecating on toilet floors, my first thought was:
“I’m not going to write an article about this. It’s a trivial employee discipline issue, and Bond Review is better than that.”
Then I came to my senses, mixed myself a glass of Old Cynic, and started mashing keys.
So, the news here is that staff at the headquaters of the Financial Conduct Authority have been excoriated by one of their most senior directors for
leaving cutlery and crockery in the kitchen areas, overflowing bins, stealing plants and charging cables from desks, catering and security teams being subject to verbal abuse, colleagues defecating on the floor in toilet cubicles on a particular floor, urinating on the floor in the men’s toilets and leaving alcohol bottles in sanitary bins
according to Chief Operating Officer Georgina Phillipou.
Who probably wasn’t told, when she accepted the job of one of the most senior officials at the financial regulator of the United Kingdom, that it would involve attempting to potty train thousands of highly qualified financial regulators.
On a message posted on the FCA’s Intranet, the Chief Nursery Officer continued:
I did think long and hard about whether to disclose all these behaviours because they are so distasteful and shameful but keeping quiet has not got us far in terms of changing behaviours. This kind of behaviour is unacceptable and will not be tolerated here.
Whether the “look at what you just did” school of discipline works on the UK’s foremost financial supervisor remains to be seen. But it’s worked on millions of dogs, so best of luck to Ms Phillipleasedontpouonthefloor.
Obviously it’s very easy to make cheap jokes about civil servants trashing their office, which is why I’m doing exactly that.
But there is a more significant point here.
In the 1990s a social science theory known as “broken windows” came to prominence in New York City. The idea was that if you tackled low level crime, such as bricks being thrown through random windows, people would start taking pride in their neighbourhoods, and more serious crimes would be nipped in the bud.
In essence, broken windows theory is that you have to make people on the ground care about their environment, and only then can you hope to improve it.
Whether broken windows theory ever led to a reduction in the crime rate is disputed, as any experiment involving a dataset as chaotic as the crime rate always will be. But the theory itself is logically sound.
As to how this theory applies to the FCA, it’s simple. If you can’t trust regulators to not shit on the floor, or swear at the dinnerlady, how the hell you gonna trust them to deal with scammers and crooked bankers?
The Financial Conduct Authority’s job is to ensure billions of pounds in UK capital flows to where it’s needed, and that the 70 million people in the UK can open bank accounts, save into pensions, wave cards and generally interact with the financial system without worrying if they’re going to lose their money by doing so.
If that isn’t enough to get FCA employees out of bed in the morning, without reaching for the bottle on the bedside table, then we are screwed.
And if this isn’t enough to get FCA employees out of bed in the morning, that’s not their fault, that’s the fault of senior management, and the culture they created. That’s not me talking; that’s the gist of the FCA’s own Senior Managers and Certification Regime, due to come into force next month.
SM&CR breach ahoy
After a systemic failure to intervene in unregulated investments flouting UK law on promotion to retail investors, resulting in a billion worth of lost investments in 2019 alone, the FCA is under scrutiny like never before.
The FCA’s failure to stop unregulated high-risk investments being marketed to retail investors who cannot bear the risks is a failure of culture. Part of its job, part of its statutory responsibility is to protect consumers and ensure market integrity.
In treating unregulated investments with a policy of masterly inactivity, by ignoring them as insignificant and not its problem, it has overseen billions worth of lost money and ruined lives. This policy did not come from its loose-breeched employees, but from the top.
There may be some people thinking: “Give over Brev, you can’t leverage a few rogue employees into a screed about financial services regulation. We’ve all worked in large organisations at some point in our lives, there’s always a few nobheads in an organisation of thousands.”
Well, maybe I can’t, but I’m going to leave this to Bond Review’s readership.
Do you work in a large company?
Do your work colleagues shit on the floor?
I used to work in a large financial firm, and I’ve seen my fair share of bad behaviour. I’ve had to dive under a table at a Friday social. But my colleagues didn’t steal chargers from the electrical outlets, they didn’t assault the catering staff, and they didn’t shit on the floor.
An organisation rots from the head. The FCA is now literally putrescent.
The approaching change of CEO is not enough, and messages circulated on the intranet are also not enough. A top-to-bottom change of culture is needed. Until it happens, expect more flogging of unregulated investments to retail investors without consequence, expect more ruined lives, and expect more shit on the floor.