FCA PS25/23 and the Culture Imperative: Why Measurement Matters Now More Than Ever
- Sandra Healy
- 4 hours ago
- 5 min read
This week, as the sector reflects on the FCA’s latest policy statement, PS25/23 Tackling Non-Financial Misconduct in Financial Services, one theme is becoming impossible to ignore: culture is no longer a “soft concept” or an HR side initiative. It is now a regulatory imperative.
For insurance brokers and financial services firms, this marks a pivotal shift. Non-financial misconduct (bullying, harassment, discrimination, exclusionary behaviours), is now firmly recognised as a matter of conduct risk, governance oversight and organisational integrity. The FCA has made it clear that culture is a core driver of performance and how leaders shape, monitor and respond to culture now sits at the heart of regulatory expectations.
And what resonated most for many leaders this week was this simple truth: you cannot manage what you cannot measure. When culture goes unmeasured, risks go unnoticed. When risks go unnoticed, harm becomes inevitable.
Culture as a Governance Priority
PS25/23 reinforces what many have known intuitively for years that behavioural risk is business risk. The FCA has moved decisively to embed non-financial misconduct within Conduct Rules and Fit & Proper assessments, signalling that firms must demonstrate a culture where employees are psychologically safe, valued and heard.
Compliance is no longer limited to systems and controls. It extends to how people are treated, how decisions are made and how leaders shape the lived experience of work.
This means Boards and CEOs can no longer rely on policy statements or annual engagement surveys as evidence of culture. Policies may set intent, but behaviour speaks louder than documents. Culture must be assessed, monitored and understood in real time, not retrospectively when harm has already been done.
In a sector built on trust, this represents a significant evolution. Trust is not built through optics or performance statements; it is built through the daily actions and conditions that shape employees’ culture experience.
In discussions with leaders this week, a recurring concern emerged: many organisations still approach culture through activity rather than impact. Awards, events, slogans and training can create the appearance of progress, but without evidence of change, they risk being little more than cultural theatre and inclusion by entertainment.
The FCA’s stance eliminates the space for ambiguity.
Culture can remain a blind spot if leaders cannot answer:
How safe do people feel to speak up?
Who thrives here and who does not?
Which groups experience risk or exclusion?
How do behaviours align with our stated values?
And blind spots are where regulatory breaches, reputational damage and misconduct thrive.
Culture must be grounded in credible data, not assumptions. It must be shaped by the voices of employees, not limited to leadership intentions. Understanding culture is no longer just a moral or strategic advantage, it is now a governance requirement.
The New Leadership Challenge
Today’s leadership challenge is clear: How do we build organisations that are high-performing, safe, inclusive and fit for the future?
This requires moving beyond intuition and into insight. It requires tools that illuminate the lived experience of employees across gender, ethnicity, age, disability, sexual orientation and more.
And critically, it requires measuring psychological safety - the foundation for trust, innovation and ethical decision making. Because without psychological safety, what goes unchallenged goes unaddressed. And what goes unaddressed becomes risk.
The FCA’s direction reinforces this: psychological safety is not a “nice-to-have”, it is a conduct
environment indicator. When employees feel unable to voice concerns, challenge poor behaviour or express difference, the likelihood of misconduct increases. Regulators know this, and now they expect firms to know it too.
Measuring Culture: From Intangible to Essential
This is where culture measurement moves from intangible concept to essential governance practice.
When leaders understand culture through evidence, through sentiment, behaviour, trust levels, inclusion dynamics, they can act with confidence and accountability. They can identify risk before it becomes harm. They can see which interventions work, and which do not. They can bring transparency to the Boardroom and ensure leadership decisions reflect real organisational conditions.
And just as importantly, they can answer the FCA’s fundamental question: “How do you know your culture aligns with your values, your strategy and your regulatory responsibilities?”
"When you can measure culture, you can shape it. When you can shape it, you can govern it. When you can govern it, you reduce risk and unlock performance."
The Role of inclusio: Enabling Culture Intelligence at Scale
Against this backdrop, organisations need tools that translate culture into meaningful insights. That is where inclusio provides a unique advantage.
Built on eight years of academic research and validated by thousands of employees, inclusio’s Scientific Culture and Benchmarking Framework offers an evidence-based approach to understanding your people, their culture experience and psychological safety.
Against this backdrop, organisations need tools that translate culture into meaningful insights. That is where inclusio provides a unique advantage.
Built on eight years of research and validated by thousands of employees, inclusio’s Scientific Culture and Benchmarking Framework offers an evidence-based approach to understanding your people, their culture experience and psychological safety.
inclusio provides leaders what was previously missing: a measurable, comparative and credible understanding of the lived culture across their organisation. The analytics dashboards provide sector benchmarks, management information for CEO’s and Boards and one click regulatory reporting for FCA compliance.
For Boards and CEOs, this means:
No more assumptions
No more waiting for annual surveys
No more uncertainty in Fit & Proper discussions
No more risk of overlooking vulnerable or marginalised groups
Instead, leaders receive the insights needed to make decisions with clarity - to understand cultural strengths, identify risks early and ensure alignment with FCA expectations and organisational values.
This is governance in practice. This is culture intelligence in action.
Final Reflections - Culture as a Strategic and Regulatory Imperative
Peter Drucker’s line “Culture eats strategy for breakfast” has never been more relevant. Strategy cannot thrive in environments where people feel unsafe, excluded or unheard. And now, regulators are holding leaders accountable for the cultural environments they create.
PS25/23 signals a future where culture, conduct and governance converge. Where employee experience becomes a matter of organisational integrity. Where Boards must take a proactive and deliberate stance on shaping culture as a driver of trust, innovation and sustainable performance.
The opportunity and responsibility now sits firmly with leadership. We have the tools. We have the frameworks. We have the insight. What we need now is the will to act.
Because culture changes through measurement, accountability and deliberate leadership. And when leaders commit to understanding the lived experience of their people, they unlock the true potential of their organisation.
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Authors: Sandra Healy, CEO inclusio, December 2025
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