The basic red flags of conduct risk challenges and breaches include:
• Diversification, regulated and unregulated • Conflicts • Lack of systems and controls
• High staff turnover • Fees • Complaints • Poorly-populated breaches register
• Lack of appropriate training or not completing in a timely fashion
• Infrequent board meetings • Failure to undertake due diligence
• Reward system based purely on performance not conduct
1.4 Immediate and Medium Term priorities for Farrar Bank Plc - Policies and Practices Requirement
To achieve sustainable change, the Bank will have to manage conduct risk by way of institutional values and culture. A conduct framework must cover four aspects of banking business: (1) strategy and risk appetite, (2) governance, culture and incentives, (3) processes and (4) infrastructure. Frontline involvement will be critical to make this work because changes in conduct disciplines can ultimately affect customers’ experiences. To get proper engagement from the frontline, conduct risk management needs to be described as good business practice rather than compliance with rules. The medium term prize for this fundamental shift is competitive differentiation. Banks can
…show more content…
The Board and the Executive Management Team must take the lead in defining values and principles and in providing oversight. They will also have to define the roles and responsibilities of different participants in the first, second and third lines of defence and impose a definitive separation between the three lines. The third priority is to embed good conduct into the bank’s culture. Finally, the bank must develop processes to address conduct risk. This will require re-engineering of existing processes as well as designing new ones. Talent management: Talent sourcing, training and accreditation provide the right skills and embed the right mind sets and behaviours to manage conduct