A senior Financial Conduct Authority (FCA) leader has warned that poor workplace culture in financial services can spread as rapidly as seasonal illness, potentially damaging entire organisations.

Speaking at the 10th Annual Culture and Conduct in Financial Services Summit, FCA chief operating officer Emily Shepperd explained how negative behaviours can quickly proliferate through an organisation.

"Like a winter bug making its rounds, culture can move quickly from person to person, meeting to meeting, decision to decision," she said. "A careless comment, raised voice or silence in the face of wrongdoing can infect whole teams and threaten the health of an entire organisation."

The scope of cultural problems in the sector was highlighted by an FCA survey that uncovered 2,347 allegations of non-financial misconduct across approximately 1,000 wholesale financial firms during 2023 - equivalent to nine incidents reported daily.

Shepperd emphasised that such behaviour often indicates deeper organisational issues: "These environments where people don't feel psychologically safe to speak up can become breeding grounds for even bigger problems – hidden mistakes, ignored risks, and ultimately, harm to consumers and our markets."

She noted that positive culture is equally transmissible, with respectful and supportive behaviours helping create environments where staff feel valued and empowered. Research suggests this approach delivers better outcomes, as "teams where people felt safe to speak up, challenge ideas and admit mistakes, outperformed those that didn't."

The executive also noted that the FCA is actively working to address cultural issues in the sector, with new rules and guidance on non-financial misconduct expected shortly. The regulator is also collaborating with the Prudential Regulation Authority (PRA) on diversity and inclusion initiatives.

"The lesson for our financial services sector is clear: cultures that encourage open dialogue, constructive challenge and learning from failure, fuel innovation, agility and longer-term success," Shepperd concluded.

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