In a recent speech, Andrew Bailey, Chief Executive of the U.K. Financial Conduct Authority (FCA) extolled the U.K. Senior Managers and Certification Regime (SM&CR) and measures to govern the remuneration of senior managers as important ways to incentivize the creation of “good culture” – defined as encouraging good things, rather than simply stopping bad things from occurring – at fund managers and other financial services firms. Bailey outlined his thoughts on ways the FCA can promote good culture; discussed factors driving bad conduct at fund managers; lauded the SM&CR and remuneration guidelines as two recent developments that incentivize good culture; and promoted increased workplace diversity. Bailey’s remarks provide fund managers with important insight into the FCA, which views culture – and the protection of the public interest – as the responsibility of firms, their managers and owners. This article summarizes the key points from his speech. For more on the SM&CR, see “FCA Issues Guidance on Expansion of Senior Managers Regime to Fund Managers and Others
” (Feb. 1, 2018). For additional commentary from Bailey and the FCA, see “FCA Details Three of Its 2017 Priorities: Competition in the Asset Management Market, Liquidity Management and Custodians
” (May 4, 2017).