Financial services firms are being urged to develop better ethics if the plethora of upcoming regulations in Europe, aimed at preventing another financial crisis, are to be deemed a success.

Hector Sants, chief executive of the Financial Services Authority, the UK regulator, said that new regulations, such as MiFID II and Emir, will eventually fail unless firms adopt the correct culture in the future.

“Even a successful regulatory regime will not be sufficient to ensure good outcomes,” said Sants, who was delivering his final speech today at the helm of the UK watchdog. The Financial Services authority is to be scrapped next year with a number of new agencies in the Bank of England taking its place.

“Crucially, firms need to have an appropriate culture and one that is focused on the firm delivering the right long-term obligations to society. The right cultures are rooted in strong ethical frameworks and the importance of individuals making decisions in relation to principles, rather than short-term commercial considerations.

“In particular, this means that when a regulator expresses a clear instruction then firms should not continue to resist for reasons of expediency and short-term gain.”

Meanwhile, some industry participants believe that the regulatory rush from consultation to law will lead to many European firms not being able to comply in the future due to hastily thought out rules introduced by regulators and politicians.

A recent report by London-based financial analyst JWG says that many firms are fearful that the industry is not being properly consulted on potentially onerous legislation that is being rushed through Brussels.

For example, the recent iteration of Emir, or the European Markets Infrastructure Regulation, that is currently snaking its way through the European Union has seen 100 pages of changes added to it. Emir, which will require over-the-counter traded derivatives to be processed through clearing houses, was earlier this month been given the seal of approval by the European parliament, and is expected to become law by the end of the year.

“The level of dialogue [between regulators and the industry] has decreased as the requirements have increased,” said Michael McKee, a London-based partner at law firm DLA Piper. He added that the regulatory focus on creating a tsunami of new rules has left the regulators too busy to hold meaningful consultations with the industry.