Legal and General Investment Management (LGIM) CEO Mark Zinkula has hit back over reports about the 'toxic' culture at his firm.
In a letter to clients, Zinkula (pictured) addressed an article published earlier in the week by the Financial Times, which claimed a number of staff at Legal & General Investment Management (LGIM) had contacted the Financial Conduct Authority (FCA) to voice their concerns about the company’s ‘toxic’ compliance culture.
Zinkula said the case relates to a long-standing whistleblowing matter with LGIM, which emerged at the end of last year.
'I want to reassure you that we take the allegations extremely seriously, but we believe very strongly that the picture presented of our culture is not one recognised by our employees and, we hope, by you, our clients,' he wrote.
'We are extremely proud of our strong, client-led culture and this remains, as always, our focus.'
Zinkula said his firm actively support whistleblowing, with its 'robust' policy adopted across the L&G Group. This allows individuals to raise concerns anonymously and have them treated confidentially via a dedicated whistleblowing hotline.
He highlighted that when the whistleblowers first emerged, LGIM conducted a thorough examination.
'Our risk team conducted a thorough, deep-dive investigation into the issues raised. At this time, a small error has been identified for one client, who was compensated some time ago, in line with our normal process,' he said.
'We must accept that, unfortunately, incidences of human error do occur, but they account for a small proportion of the hundreds of thousands of trades we deal with on an annual basis.
'When they happen, they are investigated under our risk framework and, if a client suffers a loss, LGIM is completely transparent, compensating clients accordingly. This focus on putting our clients first is fundamental to our business.'
Zinkula stressed LGIM has kept the regulator fully informed throughout and is not under investigation by the regulator.
He went on to say the vast majority of the firm's employees do not have concerns about LGIM's culture.
He also drew attention to a recent independent review into LGIM's corporate culture by law firm Latham and Watkins, which concluded LGIM has a 'positive, respectful, professional and client focused culture' (see summary of findings below).
Zinkula added: 'While we are proud of the business we have built, we are never complacent and as a result deal seriously with any employee issues raised. It is for this reason that we work hard to foster an environment where employees feel they can speak up and are encouraged to do so.
'We are always mindful of the fact that our business and culture need to continually evolve to meet the changing needs of our clients and the industry.
'It is for this reason that we have been investing significantly in the business and will continue to do so, both to maintain our growth trajectory and ensure we continue to improve the service we offer to our clients.'
The Latham Watkins report
The principal objectives of the review were to help gauge the levels of cultural awareness across the firm, identify any areas of particular concern and highlight any potential sub-cultures.
Culture, for these purposes, was defined broadly to encapsulate not only risk and compliance culture, but also the wider working environment – including (amongst others), tone from the top, management style and effectiveness, diversity, professionalism, flexibility, respectfulness, client-centricity and inclusion.
The review methodology included (amongst other things) a series of interactive focus groups and one-on-one meetings with a representative cross-section of employees within the firm – with differing roles, seniority and length of tenure.
The report concluded that: 'It is clear that LGIM takes culture very seriously; and, in our view, sits towards the upper end of the spectrum when compared with peer firms.
'On the basis of our review, and on the balance of the evidence, we would conclude that LGIM has a generally positive, supportive, client-focused and respectful culture that promotes responsible behaviours. We were encouraged to encounter, throughout the review, a clear and consistent focus on LGIM’s clients.
'Importantly, LGIM appreciates that culture is an on-going project and not just a one-off and/or ‘tick box’ exercise. LGIM’s concerted focus on culture has been strongly conveyed to employees, through a combination of management pronouncements, presentations and surveys.'