Are You Ready for the Conduct Rules Implementation Deadline?

The FCA last week confirmed that the deadline for the implementation of the Certification Regime and training all financial services staff in the Conduct Rules has been postponed to 31 March 2021. However, this does not mean you can afford to be complacent. The deadline may have been extended but it is important to use this extra time to ensure your firm is ready.

These steps represent the next phase in the implementation of the Senior Managers and Certification Regime (SMCR), which has applied to solo-regulated firms since 9 December 2019. The regime represents a step-change in how the financial services sector is regulated.

SMCR is about improving culture and conduct at all levels by increasing personal accountability. The Conduct Rules form an important element in this and set out the regulator’s minimum expectations in respect of standards of individual behaviour within the sector.

By way of a reminder, the five Conduct Rules are as follows:

  • You must act with integrity
  • You must act with due skill, care and diligence
  • You must be open and cooperative with the FCA, the PRA and other regulators
  • You must pay due regards to the interests of customers and treat them fairly
  • You must observe proper standards of market conduct

The Conduct Rules apply to almost all staff who carry out financial services roles within a firm. Staff within the scope of the Senior Managers Regime and Certification Staff should already have been trained in them. However, the next phase is to ensure all relevant staff within a solo-regulated firm receive the appropriate training. The FCA has provided a list of jobs which are out of the scope of the training (i.e. ancillary staff). All others must be trained.

A Senior Management Function (SMF) holder within the firm should already have the responsibility for the ‘performance by the firm of its obligations in respect of notifications and training of the Conduct Rules’. It is their role to ensure a training regime is in place and to oversee its delivery.

Conduct Rules training should be interactive and utilise realistic scenarios that explore the nuances of conduct breaches. E-learning modules, such as the interactive case studies available on the Development Zone, can help provide the basic knowledge and help reinforce understanding, but firms should go beyond this and make sure the training is tailored to the requirements of individual roles.

Firms should therefore consider the nature of each job role within the organisation and the interactions and activities it involves on a day to day basis. In what ways could the misapplication of the role cause harm to consumers, the firm, or the market? This will help make sure that each person trained will know exactly how the five Conduct Rules apply to them personally. It is wise for individuals to provide reflective statements on this as part of their CPD records.

The whole team should be engaged with the Conduct Rules training, with line managers taking a leading part in the delivery. It is not a responsibility which should be ‘outsourced’ or left purely to the HR or Compliance teams.

Conduct Rules training should be embedded into the organisation’s culture, with conduct being linked to fitness and propriety assessments and performance indicators. Firms should put in place measures to assesses the ongoing effectiveness of such training, reviewing and improving it wherever needed.

Fundamentally, the theme of personal accountability should be stressed and all staff should recognise that this is not simply a formality or a ‘box-ticking exercise’ but a meaningful endeavour in preventing harm within the firm and in the wider market.

If you need advice on how to implement Conduct Rules training in your firm, please contact your RWA Business Manager.

About the author

Nathan joined RWA in 2016 on successfully completing his PhD. He previously worked in the private, public and charitable sectors. Nathan leads the content and professional standards team at RWA and is responsible for managing and curating technical content on the Aviva Development Zone and the award-winning My Development Zone e-learning platforms.

Since joining RWA, Nathan has written hundreds of business skills e-learning modules and assessments on a variety of subjects, including leadership and management, communication skills, human resources, employability, regeneration, citizenship and equalities.

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