The Chartered Insurance Institute (CII) wants the UK Government to focus on culture as well as compliance when regulating its financial services sector.

In its paper, A New Approach To Financial Regulation – Embedding Professionalism, the CII says the global financial crisis showed that a process-driven approach to regulation is ineffective, and that a firm’s culture is a major predictor of how it will treat its customers.

“The FSA itself has acknowledged this fact,” CII CEO Sandy Scott said. “We want to see this reflected in the new regulatory approach being developed and ask the Government to put consumer interests at the heart of the regulatory approach by developing a proportional risk-based focus to regulation.”

The CII says a willingness to adopt voluntary codes of conduct, as well as a demonstrable commitment to training and education, could help to indicate which firms have the highest professional standards.

“An increased scrutiny of firms and individuals who fail to exhibit such professional commitment would focus regulatory activity where it would be needed most,” Dr Scott said.