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This Practice Note examines the Financial Conduct Authority’s (FCA) focus on culture and the role of the Senior Managers & Certification Regime (SM&CR) in improving culture. It examines in turn the FCA’s so-called ‘cultural levers,’ which the FCA suggests can be used to drive a healthy culture and which FCA supervisors will employ in their assessment of culture in financial services firms and in their supervision of senior managers. It considers the FCA’s discussion paper, DP18/2, DP20/1 and FCA speeches and publications on the topic. It also considers the FSB’s ‘Toolkit for firms and supervisors— Strengthening Governance frameworks to mitigate misconduct risk’.

Key points are as follows:

1. •

   the FCA considers that culture is both a major driver and potential mitigant of risk

2. •

   the main aim of the SM&CR is to drive cultural change; one of the primary objectives of the FCA and PRA’s September 2023 proposals on diversity and inclusion (D&I) is to achieve healthy cultures

3. •

   the FCA cannot impose a defined culture, as there is no ‘one size fits all’ culture appropriate for the