changes that are frequently focused on. i am still sceptical as to whether the cultures and values that firms espouse are, in many cases, the ones that they really want and believe in, and will be sustained at moments of real pressure. but, it is my job to be sceptical. it is your customers ’ views that are more important, and it is the treatment of them, that you are demonstrably putting them first, that is the true test. and only through cultural change can you pass this test again and again, and in doing so, restore trust in the system. i thank you for your attention. 1 address to the association of compliance officers - 10 november 2017 2 “ culture eats strategy for breakfast ” was first articulated by peter druker. 3 financial stability board guidance on supervisory interaction with financial institutions on risk culture, 7 april 2014. 4 examples : honohan report 2010 ‘.. risky borrowing and lending behaviours ’ ; dirt inquiry 1986 – 1998 ‘ misbehaviour by banks in facilitating tax evasion ’ ; tracker mortgage review 2017. 5 for details on the central bank ’ s financial regulation structure, see address to the association of compliance officers – 10 november 2017 6 examples : bank of international settlements, 2016 ; ecb, 2015 ; federal reserve bank of new york, 2017 ; bank of england, 2016. 7 group of thirty ( g30 ), banking conduct and culture : a call for sustained and comprehensive reform, 2015. 8 daily, c. m., dalton, d. r. and cannella, a. a. ( 2003 ) corporate governance : decades of dialogue and data. academy of management review, 28 ( 3 ), pp. 371 – 382. ; maznevski, m. l. ( 1994 ) understanding our differences : performance in decision - making groups with diverse members. human relations, 47 ( 5 ), pp. 531 – 552. ; robinson, g. and dechant, k. ( 1997 ) building a business case for diversity. academy of management executive, 11, pp. 164 – 177. ; zelechowski, d. and bilimoria, d. ( 2004 ) characteristics of women and men corporate inside directors in the us. corporate governance : an international review, 12 ( 3 ), pp. 337 – 42. 9 hoogendoorn, s., oosterbeek, h. and van

the desired culture ; and reviews of board effectiveness, committee structures and staff performance review processes. 3. the board overseeing product development and usage, including considering how behavioural economics and marketing are being used, to ensure that customer interests are at the heart of the process – i. e. products are truly in the customers ’ best interests, and not taking advantage of, for example, short term benefits with longer term costs. 4. as i will come to, the board actively promoting diversity and inclusion at all levels of the firm to improve decision - making. 5. requiring internal audit to include a culture audit in the annual audit plan. this might include the extent to which culture is cascaded by the articulation of expected behaviours. 6. ensuring all three lines of defence have a responsibility for driving culture at a business line level rather than enterprise level so that culture is truly embedded in the institution ’ s risk management framework. 7. ensuring incentivisation ( in its broadest sense, i. e. not just financial ) is fundamentally linked to appropriate behaviours ; for example, ensuring promotion, recognition, and the variable compensation element of remuneration is consistent with the behaviours expected of employees to ensure the culture of the firm is reinforced. 8. driving consistent communication of the desired culture from the board, recognising the importance of ‘ tone from the top ’, to all staff levels of an institution. 9. actively celebrating, incentivising ( e. g. recognising and promoting ), those who come forward to identify issues and behaviours that are not in line with or at least risk factors regarding the espoused values and desired culture of the firm. and all of the above to be informed by questions that not only relate to whether the actions are legal, or in compliance with regulatory requirements ( important as they are ), but rather questions such as : is this sustainable? is it in the long - term interests of our customers? does this fit with our espoused values? is this right? how are my staff incentivised to act? and how does my organisation treat people that raise problems, issues and concerns? 3 / 7 bis central bankers'speeches diversity there is strong evidence that diversity and inclusion has a role to play in improving culture. groupthink has been identified as a contributing factor to the financial crisis. there is strong research to show that diversity at senior levels of regulated entities can help to reduce the likelihood