Leading a culture of integrity Building trust ‘Doing the right thing ’ Case Study

1. Leading a culture of integrity Building trust ‘Doing the right thing’ Case Study

2. Towry - Overview • Fee based financial advice • All employees remunerated through salary • All employees are shareholders • We are agents of our clients • Our mission is to help client realise their financial dreams and avoid the financial nightmares

3. Shaping our Culture‘Doing the right thing’ • Why now? • Increased and complex regulation • Rapidly changing landscape - emerging profession • FCA focus on culture • Acquisition strategy • Client experience audit– behaviours & process • Status of Towry • Trust is at an all time low in FS Employee engagement must be strong That’s why now • Text • Text (Do not use smaller text than this 18pt on presentations) • Hand-out text size • Text • Text • Text • Text (Do not use smaller text than this 14pt on presentations)

4. The importance of CultureFCA view... Culture is like DNA.  It shapes judgements, ethics and behaviours displayed at those key moments, big or small, that matter to the performance and reputation of firms and the service that it provides to customers and clients. Clive Adamson, Director of Supervision, FCA at the CFA Society - UK Professionalism Conference, London.

5. FCA view on drivers of culture at a firm These include: • Setting the tone from the top • Translating this into easily understood business practices • Supporting the right behaviours through performance management, employee development, and reinforcing through reward programmes

6. How will the FCA assess culture? Draw conclusions about culture from what they observe about a firm, in other words... • Joining the dots rather than assessing culture directly via a range of different measures e.g. • How a firm responds to, and deals with regulatory issues; • What customers are actually experiencing when they buy a product or service from front-line staff • How a firm runs its product approval process and the considerations around these • The manner in which decisions are made or escalated • The behaviour of that firm on certain markets; and even the remuneration structures.

7. The challenge of behaviours and cultureThe overlooked element of internal control The elements that determine organisational resilience Valid purpose, vision and values How strong is this element of our internal control framework? Effective operating and control model Appropriate behaviours and performance culture Necessary processes and systems Delivering good governance and resilience depends on achieving and aligning three key elements

8. Shaping our CultureHow do we assess our culture? • Towry already have • pulse surveys/employee engagement survey • MC3 management feedback • Appraisal discussions • Exit interviews • Whistle blowing policy • Code of conduct • Codes of ethics - professional bodies employees subscribe to • Text • Text (Do not use smaller text than this 18pt on presentations) • Hand-out text size • Text • Text • Text • Text (Do not use smaller text than this 14pt on presentations)

9. Shaping our cultureHow can we define our culture? • Online survey – MoralDNA • Structure interviews – Principled Consulting • Governance review – PwC • Audit findings – PwC and Principled Consulting • Master Class for Exco & Board – Roger Steare, Corporate Philosopher

10. Towry vs FS IndustryMoral Values

11. Towry vs FS IndustryEthical Consciences

12. Towry - Life vs WorkEthical Consciences

13. Initial ObservationsPrincipled Consulting (PC)– Structured Interviews • We have heard much that reflects well on all Towry staff and have been impressed with the attitude and loyalty. • Internal communication is not always consistent. Silos exist and managers are inconsistent with the way news is shared and distributed. • Some feel they and the client have become marginalised under the pressure to meet FCA requirements. “Cumbersome” procedures was a recurring theme and this is being addressed. • Culture featured strongly with a wide range of views. Although things were seen as needing attention, overall the impression is that Towry has a decent culture which requires polishing and, especially with regard to Values, refreshing. There is a deep fund of goodwill which should not however be run down.

14. Initial ObservationsPwC Governance ReviewComplaints Handling, Product Selection and BPM’s • Towry is very engaged to ensure that its policies and procedures are aligned to its core values. • However, this is an implicit rather than an explicit alignment as Towry has not mapped its processes and procedures to its core values. • There is a risk that the behaviours required to bring the core values to life will be interpreted differently and inconsistently applied, thereby potentially undermining the core values that Towry is striving to achieve. • Additionally, from the interviews and other discussions PwC understands that in some cases Towry’s processes are seen as being over-engineered, cumbersome and time consuming to apply; an area that is understood to be currently under review.

15. Shaping our Culture What is emerging We now have a benchmark from which to act

16. The challenge of behaviours and culture The key drivers of behaviour Intrinsic motivators Purpose – Why does the company exist? Decisions and actions in the moments that matter that create the habits of practice Results How they act Vision – The company it expects to be in the long term Values – Who is the company? Behaviours –What is right? Reinforcers Leadership actions Business goals and outcomes Structure Operating models and procedures Management Structure Performance measures Reward, training and talent

17. Shaping our CultureJoining the dots….. • Healthy Leadership • ‘Tone from the top’ • ‘Stepping up’ – Senior Management Team • Coaching peak performance • Enhancing job descriptions • Towry code of behaviours • Polish up our values Shaping our Culture ‘doing the right thing’ • Regulatory expectations • Treating Customers Fairly • Definition of culture • Thematic Review • Decision making framework • Whistle blowing • Tone form the top • Measurement/internal audit • Decision Making Framework • Adopt • Evidence client & risk • Governance • Focussed communication • Management accountability • Pull v push • Corporate • Business • Role / office • Client Experience • Process & behaviours • Silos

18. Thankyou