A closer look at the Conduct Rules
Individual Conduct Rules – Applicable to all staff
Rule 1: You must act with integrity
- Are you aware of the regulators latest views on Conduct Risk?
- Are you sure your view of integrity is the same as that of the market and of those who police the market?
Rule 2: You must act with due skill, care and diligence
- Do you understand your roles and responsibilities properly?
- Have you been adequately trained to do your job?
- Do you take time to stay up-to-date and to educate yourself on market changes?
- Do you have any recognised qualifications in relation to your role?
Rule 3: You must be open and cooperative with FCA, PRA and other regulators
Rule 4: You must pay due regard to the interests of customers and treat them fairly
- In the wholesale markets are you aware of the latest MiFID suitability and appropriateness rules?
- Do you view your customers as business partners or as victims to fleece?
Rule 5: You must observe proper standards of market conduct
- Are you aware of the latest Conduct Risk views, Market Abuse Directive, etc
SMR Conduct Rules – Applicable to Senior Managers
Rule 1: You must take reasonable step to ensure that the business of the firm for which you are responsible is controlled effectively
- Are the processes for the business you manage accurately mapped out, including processes with other entities within your firm and with third-parties
- Are there documented controls for those processes and are the regularly tested?
- Are the processes and controls understood and adhered to?
- Are your personnel adequately skillful, knowledgeable and trained to do their jobs?
Rule 2: You must take reasonable steps to ensure that the business of the firm for which you are responsible complies with relevant requirements and standards of the regulatory system
- Do you have a regulatory rules map for the business(es) you manage which shows the laws and regulations that business must adhere to?
- Do you have controls in place to ensure compliance?
Rule 3: You must take reasonable steps to ensure that any delegation of your responsibilities is to an appropriate person and that you oversee the discharge of the delegated responsibility effectively
- Are delegated responsibilities properly documented and roles and responsibilities fully understood?
- Are the staff you delegate to adequately skillful, knowledgeable and trained to do their jobs?
Rule 4: You must disclose appropriately any information of which the FCA or PRA would reasonably expect notice so appropriate action can be taken
- Are you aware of regulatory breaches and SMCR conduct breaches when they arise?
- Do you have adequate processes in place to manage, report on and remedy breaches when they occur?
- Are you aware of weaknesses in your control framework which might lead to breaches and do you have a programme of action in place to fix those weaknesses?
- Do you have an effective process to action areas of concern highlighted by your firms’ Risk and Control Self Assessment (RCSA) process?
- Do you have a proactive approach to informing the regulator in respect of the above?