FMSB publishes review on current conduct and culture MI practices

FMSB publishes review on current conduct and culture MI practices

In an era of heightened scrutiny on the ethical practices of financial institutions, a core aim of the Financial Markets Standards Board (“FMSB”) is to uphold integrity in wholesale markets. On July 24, 2023, the FMSB released its highly anticipated report, Conduct and Culture Management Information (“MI”): Boundaries of Current Practice, which establishes a benchmark for current conduct and culture MI practices among its members. These global financial firms submitted information in May detailing their existing MI frameworks.

The purpose of this article is to summarise the key takeaways from the FMSB’s review.

What is the purpose of the Conduct and Culture MI review?

The 2008 financial crisis revealed deep issues with conduct and governance at financial firms. In its aftermath, these institutions invested heavily in frameworks, data, and infrastructure to understand and improve their cultures. However, conduct challenges persist, posing material risks.

With this report establishing boundaries of current practice, firms can now benchmark their progress and prioritise next steps in their ongoing efforts to maintain ethical cultures. That said, measuring conduct and culture remains an imperfect science. While metrics provide valuable behavioural insights, they do not enable precise measurement.

Through aggregated and anonymised data, the study examines how 24 major international institutions, all members of the FMSB, currently handle MI related to conduct and culture.

Which information was requested from FMSB Members?

Participating firms provided information on their strategy, data, metrics, reporting, governance, and future priorities for conduct and culture. Key priorities include improving data collection, analytics, organisational alignment, governance, communication, and development programs.

Firms also submitted board-level dashboards highlighting their current conduct metrics.

Defining the Distinction: Conduct vs. Culture

Before examining the report’s key takeaways, it is essential to differentiate between conduct and culture:

  • conduct refers to the expected behaviours and actions of employees that ultimately benefit customers and markets; whereas
  • culture encompasses the values, beliefs, and norms that shape conduct.

All participating firms had a working definition of “conduct.” They defined culture as the drivers of conduct, including central values like transparency, psychological safety, and employee well-being. Firms recognised distinct subcultures could exist within an organisation. Additionally, some use “behaviour” interchangeably with “culture” to focus on specific actions rather than abstract concepts.

What are the key findings of the review?

The key findings of the review can be summarised as follows:

  • conduct metrics have hardly changed over the last five years;
  • culture metrics need greater focus on behaviour drivers;
  • coordinating data firm-wide could improve reporting completeness;
  • including external data sources and creating new metrics enhance insights;
  • behavioural science expertise is growing, with some firms building in-house teams; and
  • regulators recognise behaviour-led strategies can improve culture and catalyse changes.

What are the main metrics used by firms?

Around 2014, firms accelerated development of conduct risk metrics, initially prioritising known misconduct events like compliance breaches. These early metrics emphasised regulatory “sticks” (e.g., tracking breaches, sanctions) rather than cultural “carrots” (e.g., measuring wellbeing, psychological safety). Executive dashboards continue to commonly track controls, policy breaches, and regulatory sanctions as key performance indicators.

Some financial institutions now maintain hundreds of granular conduct metrics targeted at different business lines and audiences. In addition to internal data, they are incorporating more external data points as well, such as customer complaints. Firms are also beginning to collect and analyse new types of data to address specific emerging conduct issues. However, development of meaningful cultural metrics remains limited across the industry.

While taxonomies categorising conduct metrics have become more sophisticated, high-level reporting and analysis of this data remains fragmented rather than cohesive across firms. This makes benchmarking and identifying best practices difficult. Though metrics provide insight, most firms acknowledge that quantifying culture and conduct remains an ongoing challenge.

Which data sources are firms using?

Internal data sources include surveys, breaches, HR, risk/audit, transactions, communications, ESG and D&I targets. External data use is increasing (e.g., complaints on social media).

Data modelling is basic currently, focused on trends overtime. Some firms use advanced math and external software. Few firms have predictive capabilities.

The integration with risk process is generally working though frameworks, governance, and HR. It tends to be historical, not forward-looking.

 Conduct and culture oversight

Conduct oversight involves the board, management, risk, compliance, HR, and various committees. Boards receive quarterly conduct reports while management reviews them monthly.

What are the three stages of development suggested as reference points?

The report outlines three stages of development to serve as reference points, reflecting the evolution in how firms utilise conduct metrics. Stage 1 focuses on basic rule compliance, with metrics aimed at minimising misconduct breaches. Stage 2 begins targeting specific behaviours to induce positive change. The metrics become more sophisticated but remain grounded in analysing misconduct.

Stage 3 marks a shift to promoting good conduct as the norm rather than just deterring bad behaviour. Metrics emphasise positive outcomes for employees, customers, and markets. They track progress on organisational culture and ethics. Analytics utilise predictive models and data science to implement developmental programs proactively.

Currently, most firms remain in Stages 1-2, with metrics centred on compliance, controls, and known misconduct risks. However, a few leading firms are starting to explore the potential of Stage 3’s forward-looking approach.


The review establishes current practice and suggests firms can now better self-assess, prioritise, and maintain healthy cultures long-term. The FMSB may extend the work to explore how conduct/culture drives better market outcomes.

Need help?

The consultants at C&G Regulatory Solutions have substantial expertise in conduct risk and are ready to help companies strengthen their conduct risk frameworks and governance. They can also apply their knowledge to aid workforce plannnig and recruitment efforts focused on securing top talent capable of building robust conduct risk management programs. Please contact us to learn more about our capabilities and how we can collaborate to meet your firm’s specific requirements.


  1. Conduct & Culture MI. Financial Markets Standards Board. Available at: FMSB-Conduct-and-Culture-MI-Report-July-24-2023.pdf (last accessed 18th October 2023)



Luiza Barwood

Luiza Barwood

Luiza Barwood

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