Conduct, Culture and Caves
- Jun 16
- 14 min read
Last week I attended the 11th Annual Culture and Conduct Summit in Financial Services, hosted by City and Financial Global.
With it came the faint damp smell of something that has been left in the cupboard for too long or had passed its sell-by date.
An old duffle coat or aged cheese.
Not that conduct and culture in Financial Services shouldn’t still be a top priority and an area of intense focus and scrutiny.
Despite the futuristic claims of AI evangelists, the performance, resilience and risk management of all financial institutions continues to be shaped by human behaviour.
The decisions and actions of management, employees, customers, suppliers, regulators and investors influence every key business and operational outcome.
This impacts not just the success of individual firms and the treatment of their clients, but ultimately feeds into going concern and systemic risk.
How then can we explain the dank atmosphere and lack of energy last week?
My best guess was that there were only 100 attendees in the room, and this had further dwindled by the close, with a few drifting away and not returning.
This turnout was down on last year, both in numbers and in vibe.
I am sure elsewhere in the City there were parallel worlds. Spangly parties with all the cool kids attending. Buzzy events in funky venues.
Focussing on fintech, AI and cyber. Launching off from the rocket pad into the future like last weeks mega IPO.
Meantime I sat in a windowless room with a bad cup of coffee, doodling notes that fed into this article.
Caves
I should have known what I was getting myself into.
As an attendee of the 10th Annual Culture and Conduct Summit in Financial Services i experienced both the format and the venue.
I even wrote about it here - https://www.behavor.co.uk/post/bank-culture-blind-men-and-elephants
Much of my critique from 2025 held true for 2026, with the caveat that it was less insightful and with a narrower focus than the prior iteration.
Perhaps the fusty atmosphere was partly due to it being hosted in a cave.
OK, technically it was in the large basement of a mews house. A tardis-like space, dug down into the earth.
But to me it reinforced the sense, as I sat troglodyte deep in the ground, somewhere else out there life had other plans, bustling with purpose in the daylight, whilst I listened to lawyers talk to me about culture.
Legal. Lots of Legal.
To get a sense of what informed approach and latest thinking was served up on Financial Services culture, it is worth considering the sponsors of the 2026 event.
· Simmons & Simmons
· DAC Beachcroft
· Linklaters
· Norton Rose Fulbright
· Slaughter and May
5 legal firms. On a culture and conduct conference. Let that sink in.
To save me needing to think afresh on the topic, this is what i said last year:
“In the afternoon a couple of the sessions were by representatives of law firms. This was presumably not un-related to the main sponsors of the event all being law firms.
This is parallel to undertakers sponsoring a health summit; or perhaps more charitably asking a dentist to opine on your impending heart surgery.
Sure, they might know something about medicine, but they would not be the person I would want to see holding the scalpel as my eyes blur, succumbing to the anaesthetic.”
A Venn diagram of relevant expertise and focus might look something like this:
The focal point is narrow and a lot is left out.
Regulators
Much of our legal friends’ interpretation of what equates to good and bad practice in bank culture comes from their own analysis of what the regulators[i] say.
This is akin to someone claiming to be an expert chef because they once watched shifts in McDonalds. It appeals to a limited palate, is unlikely to satisfy and is probably dangerous to your health over the long term.
Graeme Reynolds (Director of Competition and Interim Director of Insurance) at the FCA delivered a valiant key note.
Drawing inspiration from Dear England, the recent BBC televised version of a play about Gareth Southgate’s tenure as England Football manager, Graeme noted how the team needed to change their mindset, remove the fear of failure and focus on the positive of scoring a penalty, not the negative of missing one.
And the imperative to take calculated risks.
The obligatory FCA tone music on the importance of competitiveness came though, echoing the speeches of Sarah Pritchard to Banks CROs[ii] in November 2025 and Rachel Reeves Mansion House speech[iii] on rules and red tape acting as a “boot on the neck” of businesses and risk that was “choking off” innovation across the UK without bold reforms.
My mind drifted back to the Gareth Southgate theme and the legendary inability of England to convert from 12 yards out.
On the topic of culture in Banks, it is worse. As we cannot even put the ball in the net with an open goal.
If the competitive pressure continues to focus the attention of the UK Government, Regulators and Financial Services companies on the need to ease red tape and regulations, then the alternative insights gained from a behavioural and psychological approach would be invaluable[iv].
The FCA also stress the importance of a deeper understanding of humans as part of their Consumer Duty focus. Likewise Graeme mentioned the need to not exploit customer biases, and to focus on the useability of systems and clarity of messages.
If that informed behavioural approach is important for one set of people (customers), surely it equally applies to another set of people (employees).
Do we leave our human traits aside when we work for a bank? Do we suddenly switch from homo sapiens to homo economicus?
It might suit existing bank models, frameworks and established practice to pretend this is the case. But turning away from reality is rarely the best course of action.
Once again there was an FCA offer to “come and speak to us” if there are concerns or new ideas. I am very happy to gather people together and talk. You know where to find us[v]
SMCR
The next (legal) presentation (bought to you by Simmons & Simmons – “We believe it is who we are and how we approach our work that sets us apart from other firms”) was on:
“Senior manager accountability and the reform of the SMRC.”
I will admit my mind was wandering at this point. Here is what I doodled in my notebook:
“wins for the industry” – hmm. What does this mean?”
“DG notes – this complex way of laws and regulations is an industry - and self supporting for law/reg/firms = need for high paying £££. Sigh”.
“I feel like I am in the wrong room…..but yet this is my area etc”
“The level of energy in the room is…..er…low”
The top scribbled line was:
“SMCR – see WS paper”
This was in reference to a 2024 research article written by Joe McGrath and Wieke Scholten PhD “Individual accountability: holy grail or poisoned chalice?[vi]”
The paper critically evaluated Individual Accountability regimes:
“using insights from behavioural science research on accountability, the regulatory theory on enforcement, and the criminological literature on compliance.”
It considered:
“the extent to which these regimes may be ineffective given what is known about the miserly nature of human cognition, the tendency to circumvent efforts to encourage ‘right’ decisions, and the inability of individual accountability regimes to address broader structural issues in financial markets”
i.e. rather then the surface level arguments for SMCR and the inevitable pushback from the banking industry it sought to understand HPAB (How People Actually Behave).
A novel concept that might one day catch on.
Boards
A session followed (bought to you by DAC Beachcroft – “We combine excellent legal skills and cutting-edge delivery expertise to design solutions that fit the needs of our clients”) on:
“The role of the Board and Senior Management in shaping culture and establishing effective corporate governance”.
A high power roster of panellists from Federated Hermes, Handelsbanken, Lazard and Moneyfarm looked out a the scattered audience and must have puzzled over the sparse attendance.
It is always interesting to hear how Board members and Execs talk about culture and what framing is used[vii]
There was the usual mix of troublingly simplistic and interestingly insightful.
On the one hand the linear talk of good, bad, fantastic cultures, and of cultures that are changed or “fixed”.
On the other hand some gems. My favourites were:
· “We don’t have bonuses. The bonus culture in Banks is a nonsense”. Kudos to Handelsbanken;
· “You need to get out and about and speak to lots of people. Chat to people in the loo”. An unknowing argument for the power of anthropology and ethnography, albeit I would urge caution on approaching people in the WC;
· “If you want a feel for a culture speak to the butlers. Talk to those at the bottom of the scale”. A phrase that says more than it intends about some banks. Butlers! Albeit speaking to the valets, drivers and maids would also be revealing.
· An insight about Sir Brian Pitman, the former chief executive and chairman of Lloyds Bank, who would often walk from place to place across the City, taking the time to chat to his companions; and on the power of Story Telling[viii].
Not a focus of the conversation, but it will be interesting to see how Boards, subject to the revised FRC Corporate Governance code, respond to the enhanced culture requirements[ix].
Will it be meaningful and behaviourally informed, or another tick in the box. As the FRC report of late 2025[x] noted:
“While most companies in our sample referenced embedding culture, many did so in a generic way, lacking meaningful insight.
Culture and conduct risk
A presentation followed (bought to you by Norton Rose Fulbright – “ With global business principles of quality, unity and integrity, we are recognised for its client service in key industries”) on:
Mananaging culture and conduct risk.
With a focus on what practical things firms could do to evidence their work on culture.
It is hard to know where to begin, in teasing apart the problems that simplistic and partial views on the topic create for the industry.
If the underlying framing is at best limited, and at worst misleading then we are all in danger of culture theatre and the illusion of control.
Uncritically taking an aged FCA (incomplete) explanation on the “4 drivers of culture” perpetuates an approach that has the benefit of simplicity, but the disadvantage of being wrong.
Like the accompanying pictures we go around in circles (squares), but are none the wiser.
What place for the insights of behavioural science and organizational psychology? For the power of social drivers and norms, for the importance of the local environment, systems and context, for the confounding factors of complexity and reality?
And as Joanna Kavenna notes in her wonderful novel Seven[xi], not only do we need to think outside the box, but we need to think outside the box about thinking outside the box (TOTBATOTB).
The following slide illustrates the problem. Culture through the lens of disparate initiatives, not from the perspective of a coherent philosophy rooted in academic rigor.
In the Q&A session someone asked on the role of Cultural Assurance work, and why it was not more prevalent.
In response it was noted that firms often shy away from such exercises for fear of what they may reveal.
Which is of course why they should be done, assuming that suitable expertise and skill is brought to bear[xii].
As the session wrapped up I started to notice the sharp shadows being cast behind the speakers, thrown into sharp relief by the spotlights.
And given that we were all sitting in a cave it brought to mind Plato.
Non Financial Misconduct
A conversation on NFM was next (bought to you by Linklaters – “Teamwork fuels our success. We work as one global team across borders and practices to bring the whole firm to our clients, enabling them to confidently seize opportunities and navigate risk”).
The title was Non-financial misconduct - Practical implications of the FCA’s latest guidance .
It is of course a very important topic, covering bullying, harassment and violence; and all FS firms need to be mindful of the changes that come into effect on 1 September 2026[xiii].
But rather than repeat the detail here, the heavy focus on the topic does leave me feeling somewhat queasy.
It is a critical issue, but not one which should become a proxy for culture and behaviour as a whole, and where correlation and causation with the wider conduct issues in relation to clients, markets and other stakeholders need to be disentangled.
If the FCA and Banks purport to be taking culture seriously because of the work undertaken on NFM, but neglect the bigger picture then I fear we have been distracted by the old cup and ball trick.
Consumer Duty
As we stagged toward lunch the next presentation was once again brought to us by Simmons and Simmons (“We set the highest standards for the work we do, meaning you will benefit from the highest quality client service”)
I guess as a premier sponsor you get more speaking slots. The topic:
Reform of the Consumer Duty in light of the drive to create a retail investment culture.
As noted earlier in this article I am a fan of how the FCA have brought the behavioural lens into consumer duty, and the need to understand the reality of how human customers behave, and to not exploit those biases or weigh people down with asymmetric processes, sludge and complexity.
Why the same insight and rigor is not applied to the employee dynamics within regulated firms is an enduring mystery that no-one in the UK regulator has yet answered satisfactorily.
Answers on a postcard please.
Future skills and culture
After lunch we settled into a panel on:
The intersect between future skills and culture
Chaired by Mark Hoban of the Financial Services Skills Commission (FSSC), former Financial Secretary to the Treasury and Minister for Employment.
What shone through was that technical skills can change quickly, but that behavioural skills are equally important, enduring and under-invested.
And if AI has a journey from literate, through fluent to native, then it is a path that also needs to be taken for BI, being behavioural intelligence.
Sadly the BI in question often seemed to revert to aspirational skills for an individual (adaptability, learning, empowerment, judgement) and a coaching mindset, rather than informed expertise and capability at an organizational level.
The future BI skills needed are not just for the apple, they are needed by the barrel.
From Artificial Intelligence to Behavioural Intelligence and from Apple Intelligence to Barrel Intelligence.
Stewardship
The next session focussed on the critical role of stewardship in creating and maintaining a healthy corporate culture.
As presented by the Head of UK Responsible Investment, Aegon Asset Management and Chair of the IA Stewardship Committee.
Full disclosure here – this was another time where I had a brain fade and started doodling in my note book, so my observations are not as sharp as they could be.
However, the evidence is mounting that a focus on organizational culture within investee firms is good for the performance and resilience of the underlying companies and for the alpha of the investors.
Research has highlighted how corporate culture can be a powerful driver of investment returns, and with the rise of big data, AI and behavioural science insights it is becoming easier for investors to assess relative cultural strengths and weaknesses as they look for new ways to source performance[xiv].
Whistleblowing
A conversation on Whistleblowing was hosted by a double act from Slaughter and May (“integrated teams to provide a seamless service on cross-border transactions”).
The focus was very much on do’s and don’ts when whistleblowing complaints are received.
My notes are not very helpful with the strange words.
“Keep a record. Keep a record. Keep a record. Preserve privileged advice. Legalistic Shneegalistic.”
When a whistle is blown then a foul has already been committed and a penalty awarded.
If you want to think about the patterns of play leading up to the foul, then you may need to look elsewhere.
ArtificiaI Intelligence
As is mandatory in all conferences the day would not be complete without a fuller discussion on AI.
And to the final panel covered:
AI governance and its cultural implications for the financial services industry
It was clear that both Governance and Regulators are playing catch up, and that the risk is often federated without clear accountability.
This creates a behavioural risk, exacerbated by cognitive surrender and the complexities of Human to Human interaction being supplemented by Agent to Human and Agent to Agent.
One panellist drew a parallel with 2007/08 and the GFC. Everyone wanting to be involved, but with a lack of clarity, ownership and it being hard to pin down the risk.
If the CISO of JP Morgan urges caution in an open letter[xv] with the words “creating a substantial vulnerability that is weakening the global economic system” then presumably focus is required.
But we need to avoid the trap of thinking the only solutions to a technical AI topic is a technical solution, forgoing the vital role of behavioural understanding and intervention.
AI can reshape individual thinking and judgement. Repeated AI interaction can then erode team debate, accountability and relationships. Accumulated AI interaction can then remodel power structures, information flows and culture.
As said before. AI is BI.
Philosophy
Last year my philosophical digression saw a parallel between bank culture and the parable of the blind men and the elephant . The danger of exploring specific parts of the animal in isolation, with different interpretations of the constituent limbs.
And with that elephant standing silently in the corner of the room. Unmentioned.
This year it is The Allegory of the Cave from Plato's masterpiece "The Republic”.
The shadows of the conference presenters clear-cut against the back wall of a cave in Marylebone.
Concerned with how people acquire knowledge about beauty, justice, and good. The Allegory of the cave uses the metaphor of prisoners chained in the dark to explain the difficulties of reaching and sustaining a just and intellectual spirit.
Plato describes people who have spent their lives in a cave, staring at a wall their only reality being the shadows cast from the objects passing in front of a fire placed behind them.
The shadows represent distorted and blurred copies of reality we can perceive through our senses, while the objects under the sun represent the true forms that we can only perceive through reason.
If any should escape from the cave, upon return their stories would not be believed by those who remained.
Throughout the day we were in the cave, looking at two dimensional representations of reality.
Partial and distorted.
When will we all take a walk outside, blinking in the sunlight?
Footnote – the Need for a Different Approach
Earlier this year I saw a survey from another bank conference on culture and conduct with results that said industry focus on the topic had:
· Increased (57%), remained the same (20%) or decreased (23%).
And yet that (virtual) event had a paltry 60 or 70 attendees. A number not out of line with the conference described here (only 80 to 100 people).
I fear we are suffering survivorship bias, where only those few remaining in the room have their opinions gathered.
What we should be thinking about is the absence from the room, the gaps in the narrative, the voices unheard.
The planes that have been shot down and the reasons for their disappearance.
One challenge is that the very things that need to be discussed are those which as humans and managers we veer away from.
A soothing and clear narrative preferred over complex and uncomfortable reality[xvi].
A technical explanation (the system failed) or a personal explanation (human error and blame).
But please not the messy middle.
And if we are going to gather again in a room perhaps it is time for a different approach.
See you on the 12th November.
References
[i] To be fair there is some good practice developing in a few leading regulators on applying behavioural science and psychology to supervision. However, there is a long way to go.
For informed insight on the state of play and a way forward see the recent report from Starling Trust: https://insights.starlingtrust.com/supervisors-on-supervision
My response to the paper’s consultation here: https://www.linkedin.com/pulse/supervisors-supervision-approach-regulators-culture-david-grosse-emfje/?trackingId=RcHYcDC2RGm%2Fm4DRbnoS5Q%3D%3D
[ii] Rebalancing risk for growth, the role of the Chief Risk Officer. Sarah Pritchard, FCA deputy chief executive, at the launch of the Chief Risk Officer Network. 5th November 2025. https://www.fca.org.uk/news/speeches/rebalancing-risk-growth-role-chief-risk-officer
[iii] The Guardian 15th July 2025 - Reeves says rules and red tape are ‘boot on the neck’ of business https://www.theguardian.com/politics/2025/jul/15/rachel-reeves-rules-red-tape-boot-on-neck-innovation-mansion-house
[iv] The Imperative of Behavioural Risk - My fuller views recorded here in response to the UK Government “Call for Evidence” on it’s Financial Services Growth and Competitiveness Strategy https://www.linkedin.com/pulse/imperative-behavioural-risk-response-uk-government-call-david-grosse-o39ze/?trackingId=YMZWbGmFR8GJ49U%2B8xOcUA%3D%3D
[v] Try: https://www.behavor.co.uk/.
[vi] McGrath, J., & Scholten, W. (2024). Individual accountability: holy grail or poisoned chalice? Griffith Law Review, 33(4), 509–533. https://www.tandfonline.com/doi/pdf/10.1080/10383441.2024.2405753
[vii] Some thoughts on the Norges Bank Investment Management (NBIM) 2026 Investment Conference with the theme “What's a Winning Culture?” are here: The C suite and the C topic. - https://www.behavor.co.uk/post/the-c-suite-and-the-c-topic
[viii] Once Upon a Time I had a Tale to Tell LinkedIn Comment
[ix] Have box, will tick? The UK Corporate Governance Code and Culture. https://www.behavor.co.uk/post/have-box-will-tick-the-uk-corporate-governance-code-and-culture
[x] FRC’s Annual Review of Corporate Governance Reporting from November 2025: https://media.frc.org.uk/documents/Annual_Review_of_Corporate_Governance_Reporting_2025.pdf
[xi] FT 1st January 2026. Seven — a mind-bending novel from Joanna Kavenna: https://www.ft.com/content/4f9ea40d-9825-4d4d-ac92-604f03818b2c
[xii] The 2025 IIA Topical requirements on Behaviour have noticed the need: https://www.theiia.org/en/standards/2024-standards/topical-requirements/organizational-behavior/
[xiii] FCA - Non-financial misconduct in financial services – https://www.fca.org.uk/firms/culture-governance/non-financial-misconduct
[xiv] The IBE - Annabel Gillard - 21 August 2024 - Is Organisational Culture the Next Frontier in Investment? https://www.ibe.org.uk/resource/is-organisational-culture-the-next-frontier-in-investment.html
[xv] An open letter to third-party suppliers. JP Morgan Chase. April 26, 2025. https://www.jpmorganchase.com/about/technology/blog/open-letter-to-our-suppliers
[xvi] The subject of my presentation on Bank Crises and the Behavioural Blind Spot – what have we learned and forgotten from the GFC and can lessons from other disasters help?https://www.libraryofmistakes.com/lectures/david-grosse-on-bank-crises-and-the-behavioural-blind-spot-what-have-we-learned-and-forgotten-from-the-gfc-and-can-lessons-from-other-disasters-help/
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