Should Financial Regulators Prioritize Culture to Restore Trust by 2025?

December 20, 2024

In an era marked by a significant loss of vote share by incumbent governing parties, as seen in developed nations in 2024, there is a clear erosion of public trust that needs urgent attention. The founder and CEO of Starling, Stephen Scott, asserts the necessity for financial regulators to prioritize cultural reform within financial institutions to address this growing concern. Scott emphasizes that a strong, ethical culture within financial institutions is crucial for restoring public trust and ensuring the stability of the financial system. By incorporating insights from behavioral science, regulators can better understand the underlying causes of unethical behavior and systemic risks, ultimately leading to improved conduct risk management.

As we move closer to 2025, there is a growing recognition of the vital link between organizational culture and financial stability. Addressing cultural factors proactively within regulatory frameworks can prevent misconduct and rebuild public confidence in financial institutions. Regulators are thus urged to embed cultural oversight into their supervisory methodologies to foster a more ethical and stable financial environment. The urgency of this transition is underscored by the potential benefits, including enhanced public trust and greater financial system resilience, advocating for a proactive stance in adopting cultural priorities.

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