In the UK, a professional code setting out behavioural expectations is commonplace. Social workers have been subject to a code of ethics since 1975. A code of conduct for barristers has existed since at least the 19th Century. The Hippocratic Oath for physicians has been around for over 2,000 years!
It’s perhaps surprising that the UK financial services industry did not have a wide-scale code of conduct until the back end of 2019, when it was introduced to a majority of financial institutions as part of the roll-out of the Senior Managers and Certification Regime. The Conduct Rules apply to almost everyone working at such an institution; notable exceptions include security guards and canteen staff. The types of financial institution are wide-ranging – from large banks and insurers to small retail outlets offering consumer credit via asset managers, investment advisers, traders, brokers and financial advisers.
Having a code of conduct for individuals carrying on a variety of tasks and at different seniority levels implicitly sends out the message that all financial services professionals have been empowered with responsibility. Setting out the required standards of conduct is important since conduct that falls short of these standards could have significant consequences.
Consider for example an individual that has lied to their employer about their professional qualifications, or has been bullying or harassing other staff members – both most likely being Conduct Rule breaches. The implications for the individual include internal disciplinary action, dismissal from employment, the incident being disclosed to potential future employers, reporting the Conduct Rule breach to the regulator and regulatory enforcement action including a fine or an industry ban. However, the firm, and other employees, might inadvertently be adversely affected too, for example due to reputational damage. Some poor conduct might adversely affect the wider sector, such as an insider dealer whose actions negatively impact the integrity of the market-place.
It’s clear that conduct which does not meet the required standards could have ramifications that go way beyond what the individual might think would happen.
The UK’s financial services regulators (the FCA and the PRA) have a focus on improving conduct within financial services at all levels – they want this to be a game changer as opposed to a trivial transfer from one personnel-related regulatory regime to another. Individuals subject to the Conduct Rules are expected not only to conceptually understand the Conduct Rules but to be aware of how these apply to their own role and responsibilities.
Firms, on the other hand, should provide Conduct Rules training that is appropriate and effective. Ultimate responsibility for this training typically rests with one or more of a firm’s senior manager and permeates throughout the organisation. Line managers can play a role in ensuring that their staff have sufficient awareness.
RQC Group’s suite of SMCR training courses aim to cover both of these aspects. Conduct Rules training is covered in three separate courses, for Senior Managers, Certification Staff and other staff subject to the Conduct Rules. Alongside educating staff members on other aspects of SMCR, as applicable, the courses aim to provide the user with the information that they require to both comply with the Conduct Rules and perform a role in implementing these rules.
For solo-regulated firms (firms that have the FCA as their sole UK financial services regulator) the deadline for training more senior staff (Senior Managers and Certification Staff) was 9 December 2019. For all other staff the deadline is 31 March 2021. Now is a good time to not only ensure that this looming deadline is met, but to appraise the Conduct Rules and SMCR training needs of all relevant staff.
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