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Less Stick, More Carrot Key to Cultural Change in Financial Services 

May 12, 2016

Lucy McNulty and Mara Lemos Stein, The Wall Street Journal

Regulators need to shift their focus from imposing headline-grabbing fines to more targeted supervision of firms in order to improve the culture within financial services, according to a panel of financial regulation specialists.

The size of financial penalties has been escalating and since the 2008 financial crisis, roughly $127 billion in fines has been handed out to banks and other financial institutions, according to Ian Johnston, chief executive officer of the Dubai Financial Services Authority.

“I’m sure you have better ways to deploy $127 billion than with the payment of fines, and I think that’s one of the reasons why the industry is grappling with this whole issue of how to improve culture,” said Mr. Johnston, speaking at the International Financial Services Forum’s City Week conference in London on Monday.

Besides the financial burden, any institution slapped with a fine also has to deal with the “huge impact” the imposition of such penalties had on public trust, said Simon Lewis, chief executive of industry trade body the Association of Financial Markets in Europe. Read more

 
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