FCA Deadline for Conduct Rules Training
An update earlier this month confirmed that the UK Treasury has made a statutory instrument to delay the deadline for solo-regulated firms to have undertaken the first fitness and propriety assessment for the Certified Persons. The new deadline, moved from 9 December 2020, will be 31 March 2021.
The FCA has also issued a consultation to change the same date in the FCA Handbook, and have so far received mostly positive feedback in changing the following items to the same, 31 March 2021, deadline:
The date the Conduct Rules come into force for all staff who are not Senior Managers or Certification staff
The deadline for Directory Persons’ information to be submitted to the Register
However, the extension of the deadline doesn’t mean deferring SM&CR until 2020. The FCA expects that most firms will be able to meet the original deadlines, particularly in the training of the Conduct Rules.
The Conduct Rules are a set of rules that apply to almost all individuals within regulated financial services firms, forming a basic set of standards by which every individual must abide. The Conduct Rules form the bedrock of the Senior Managers and Certification Regime, which has applied to banking firms since 2016, to insurance firms from 2018 and was rolled out to solo-regulated firms in December 2019.
Firms must ensure that all staff understand the Conduct Rules, and are required to provide training in how the rules apply to them.
Firms must also report breaches of the Conduct Rules; the deadline for Conduct Rule breach reporting is not changing. The October 2020 deadline for reporting non-senior manager disciplinary action resulting from breaches of the Conduct Rules looms – with late October representing the first time that solo-regulated firms have been required to submit this report.
At this juncture, for solo-regulated firms, this requirement is only likely to affect Certified Staff, and Directors who are not senior managers, because the Conduct Rules do not yet apply to non-certified and non-senior management staff. Any disciplinary action or breaches of COCON relating to Senior Managers must be reported immediately (and within seven days) to the FCA, so reports relating to senior management should have been ongoing throughout the year.
The report to the FCA - REP008 in Gabriel - must set out the details of any disciplinary action taken – ‘disciplinary action’ in this case includes formal written warnings, the suspension or dismissal of the person, or reduction or recovery of remuneration. It’s worth remembering that should any individual apply for a Senior Manager or Certified position in future, disciplinary outcomes and reportable breaches may need to be noted in references.
The shift in the date for which the Conduct Rules come into force for staff who are not Senior Managers or Certification staff means that firms will have an additional 3 months in which to train those staff on how the Conduct Rules apply to them. COCON 2.3 sets out guidance on what the FCA expects in relation to training: “Suitable training should always ensure that those who are subject to the rules in COCON have an awareness and broad understanding of all of the rules in COCON, and that they also have a deeper understanding of the practical application of the specific rules which are relevant to their work.”
Training does not have to be postponed, and in most cases, getting staff up to speed on the rules that apply to them should be an early priority. Training should also be regularly refreshed. The Conduct Rules – given their real and tangible impact on staff and firms – should be the focus of at least annual training.
We offer two online Conduct Rules courses, which allow Senior Managers and Certification and all other staff to access and complete the training at their own convenience, ideal for those who want to complete the training in their own time, or come back to it to refresh later on. They provide clear and comprehensive training in the Rules, including a mix of videos, small amounts of text and plenty of scenarios to demonstrate how the rules apply practically.
For staff who deal directly with customers, our Treating Customers Fairly online course covers the FCA’s expectations on TCF and explores practical examples and real-world scenarios, offering customer-facing staff a comprehensive understanding of the initiative that underpins Conduct Rule 4.