The blame for the erosion of trust in financial services must be laid at the feet of everyone involved in the sector, the Financial Conduct Authority's (FCA's) director of supervision has said.
Though the FCA's predecessor, the Financial Services Authority (FSA), failed as a conduct regulator, equal weighting must be given to firms that designed, manufactured and sold products not always with the needs and interests of their customers in mind, Clive Adamson said.
"[Many firms saw] the customer as somebody to maximise profit from," he said. "This has been accentuated by a view, and it has to be said encouraged by the FSA, that disclosure at the point of sale absolves the seller from a real responsibly of ensuring that the product or service represents a good outcome for the customer.
"This, in turn, has led in many cases to a tick-box and overly legalistic compliance culture within firms, encouraged by what has been seen as a tick-box regulatory approach."
Adamson was speaking at the CFA Society's UK Professionalism Conference, where he set out how the FCA will assess firms' culture.
He explained how the regulator defines culture - "it's like DNA" - and why it considers it vital to driving the right outcomes for consumers.
Where things have gone wrong in the past, Adamson said, cultural issues are usually at the heart of the problem.
"It is fair to say that, to many in the outside world, the cultural approach of doing the right thing has been lost for financial services," he said.
The FCA has identified three key drivers of culture at firms: setting the tone from the top; translating this into easily understood business practices; and supporting the right behaviours through performance management, employee development, and reinforcing through reward programmes.
Adamson said the regulator would be measuring culture at firms in a variety of ways, including finding out what customers experience when they buy a service or product, and how a firm runs its product approval process. It will also look at how firms' boards engage in these issues.
Headed up PFS for eight years
Questions over fairness
Support accessible from one place