The Conduct Rules apply to almost all staff who carry out financial services roles within a firm. The aim of the Conduct Rules, which form part of the Senior Managers and Certification Regime (SM&CR), is to improve individual accountability and awareness of personal conduct issues across firms.
According to the FCA, to apply the Conduct Rules, firms must ensure that they:
- can identify their ancillary staff (i.e. those the Conduct Rules do not apply to, such as receptionists, security guards and cleaners, among others)
- understand the Conduct Rules training and reporting requirements for Senior Managers and all other staff
- consider how staff will be made aware and trained so that they understand how the conduct rules apply to them in their roles
Last year, the FCA clarified what it considers to be good practice in terms of Conduct Rules training, giving examples of what would constitute a positive or negative approach to training.
The regulator states that Conduct Rules training should be interactive, using realistic scenarios with examples of how the rules will apply to different roles. The relevant SMF should be able to demonstrate appropriate involvement and oversight of training. Training should be regularly reinforced, and should also form part of the onboarding process in firms. Th effectiveness of any training should be assessed – this should ensure that it meets learning objectives.
Markers of poorly done Conduct Rules training, on the other hand, might be training that is overly simplistic, providing only obvious examples of Conduct Rules breaches, with no or little oversight from the relevant SMF. The training’s effectiveness will not have been assessed.
Where training is delivered by HR or a compliance team, with no line manager involvement, this may also be a concern, according to the FCA.
This ‘good practice’ guidance highlights that the FCA does not want Conduct, and the associated training requirements, to be viewed to be viewed as simply a ‘one-off event’. Healthy conduct and culture should be embedded within firms, setting a clear tone from the top.
For those signed up to the Aviva Development Zone, our ‘Regulatory Spotlight’ assessment for November focuses on the Conduct Rules – so why not test your understanding today? If you are not currently signed up to the system, you can access a free, 14-day trial here: https://mydevelopment.zone/#getStarted
If you need advice on the Conduct Rules, please contact your RWA Business Manager or email email@example.com.