Occasional Paper No. 24: Behaviour and compliance in organisations

Occasional Paper 24: Behaviour and compliance in organisations (PDF)[1]

We have published this Occasional Paper alongside an Insight article - Creating and sustaining cultures of compliance: insights from psychology and beyond[2]

Find out more about Occasional Papers and read our disclaimer.[3]

Summary

No-one should underestimate the challenge faced by financial regulators in ensuring compliance with the extensive rules, principles and guidance that govern conduct of financial services. Regulators’ approaches to compliance have tended to combine the use of detection and punishment to change firms’ incentives through strategies of ‘credible deterrence’.

Insights from psychology suggest that these strategies can be complemented by an approach that seeks to change the ‘choice architecture’ of compliance decisions. Drawing on the insights in this paper, we consider a number of actions regulators can take to enhance compliance.

Authors

Zanna Iscenko, Chris Pickard, Laura Smart and Zita Vasas.

Zanna Iscenko, Laura Smart and Zita Vasas work in the Strategy and Competition Division of the FCA. Chris Pickard is a consultant at Economic Insight Ltd. All worked on this paper while in the Chief Economist’s Department at the FCA.

Disclaimer

Occasional Papers contribute to the work of the FCA by providing rigorous research results and stimulating debate. While they may not necessarily represent the position of the FCA, they are one source of evidence that the FCA may use while discharging its functions and to inform its views. The FCA endeavours to ensure that research outputs are correct, through checks including independent referee reports, but the nature of such research and choice of research methods is a matter for the authors using their expert judgement. To the extent that Occasional Papers contain any errors or omissions, they should be attributed to the individual authors, rather than to the FCA.