Refresher Conduct Rules Training for Senior Managers and All Staff
With December 2021 and March 2022 just around the corner, it is time to start thinking about refreshing Conduct Rules training for Senior Managers and for all other applicable staff. The SM&CR was designed to reduce harm to consumers, improve accountability and strengthen the integrity of the industry. The Conduct Rules are the foundation of this regime and were implemented to set basic standards for conduct across the board. They apply to all staff who come into contact with customers or who design products or systems for use by customers; only staff with ancillary roles – such as reception staff, security, or reprographics – are exempt.
Although very few enforcement cases have resulted directly from SM&CR, it is possible to see a distinctly Conduct Rules flavour within recent cases resulting in fines. Within the previous year, breaches in fair customer treatment rules, a lack of honesty and integrity, market abuse, and lacking in skill, care and diligence have made up the majority of individual fines. The FCA has made it plain that it plans to be more assertive where there is a risk of harms to customers or breaches of PRIN or the requirement to treat customers fairly – many elements of which are directly translated into the Conduct Rules.
And breaches of the Conduct Rules for all non-senior manager staff can also have an individual impact – breaches need to be reported to the FCA, and must be noted on regulatory references, meaning that those who wish to move into certified and other more senior job types could miss out if they have breaches of the Conduct Rules on their record.
As we approach the 12 month point from the final implementation of SM&CR, now is a great time for HR departments to ensure that the breach reporting process meets the requirements. The FCA have published a webpage setting out the generalised rules; an annual report – REP008 - should be submitted for all staff who are not senior managers, breaches by Senior Managers should not be reported on REP008, but must be reported using Form D or C via connect within seven business days of the date of disciplinary action as a result of a breach. Disciplinary action includes the issue of a formal written warning, suspension, dismissal, and reduction or recovery of remuneration.
Clues within recent fines and notices tell us that the FCA is taking action where the regulator finds there have been significant harms in practice – and these do not have to be linked to financial misconduct, or even misconduct undertaken within the workplace; harassment, bullying and discrimination are on the FCA’s radar.
Training must be provided for those staff who are subject to the Conduct Rules, and this training must be effective in explaining what the rules are, what good practice looks like, and what breaches of each rule could look like.
In particular, training needs to comprehensively cover integrity. This is such an all-encompassing concept that many firms find the assessment of whether staff have breached this rule difficult. However, recent enforcement cases provide a good guide on how to approach the assessment of integrity. Integrity means the adherence to the ethical standards of the profession. In the case of financial services, assessments of integrity can be thought of as two separate issues. First, would the behaviour in question undermine public confidence in the firm or the industry, and second, has the behaviour clearly breached industry and firm accepted standards, ethics and expectations. It would be reasonable to hold a Conduct Rules individual to a higher standard than the general public, and the FCA has made their relatively strict expectations on ethical behaviour clear.
Effective, regular, training for all employees to whom one or both tiers of the Conduct Rules applies is key for compliance with the SM&CR. Training provided must be comprehensive – it must cover each of the conduct rules, it must be engaging to embed learning, and it should set out clear scenarios so that staff can understand how the rules might apply in practice. Training should present the higher standard that is expected through the Conduct Rules, rather than explaining how current practices fit into the rules.
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, and to 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.
Our updated courses for 2021/22 are available now. For large groups, we can offer a simplified enrolment service and pricing, simply email firstname.lastname@example.org.