Conduct Rules and Policy Statement | Purpose and Scope | Objectives and Responsibilities | Senior Manager Effective Control | FCA Handbook | Template for FCA Applications and Authorised Firms

1 Policy Statement

[Your Company Name]’s (hereinafter referred to as the “Company”) has developed this Conduct Rules Policy to outline the tiered rules that employees are expected to adhere to in relation to COCON for both individual and senior manager rules. The Company takes every reasonable step to ensure that staff are aware of the rules and their obligations and that they have continual access to the guidelines and rules in the COCON module and any supporting guidance.

Staff are appointed to the relevant roles based on their suitability, honesty and integrity and are assessed according to the FIT criteria to ensure that they are fit and proper to perform the role they have been assigned to.  This policy summarises the COCON rules and provides employees with guidance on how to meet the rules and comply with any associated FCA requirements and guidelines.

2 Purpose

The purpose of this policy is set out our objectives and intentions for the COCON rules and to ensure that staff are aware of their obligations and responsibilities when it comes to the conduct rules for both individuals and senior managers.

The policy covers the individual rules which are based on a person’s characteristic and the manner in which they perform their role, as well as the dedicated senior manager rules that specify which functions and areas are to be complied with by senior managers carrying our SMF roles.

3 Scope

This policy relates to all staff (meaning permanent, fixed term, and temporary staff, any third party representatives or sub-contractors, agency workers, volunteers, interns and agents engaged with the company in the UK or overseas) within the organisation and has been created to ensure that staff deal with the area that this policy relates to in accordance with legal, regulatory, contractual and business expectations and requirements.

4 What Are Conduct Rules?

The FSMA has given the FCA new powers to write conduct rules that can apply to all employees within a firm and not just those who are approved individuals and/or performing controlled or senior manager functions.

These rules can help shape the culture, standards and policies of firms as a whole and promote positive behaviours that reduce harm.

There are two tiers of rules that apply to individual and/or senior managers: –

5 Objectives

The company has set clear objectives in relation to our Conduct Rules Policy and for employees to comply with these rules. Staff are supported through ongoing training, as well as through our recruitment, selection and induction procedures and programs.

In complying with the conduct rules, the Company have set out in this policy, guidance for staff on how to effectively comply with the rules and examples of actions that may breach the rules in COCON. Staff are made aware that this list is not exhaustive, but is meant as guidance to adequately protect customers, market integrity and the business itself from harm.

To ensure effective and ongoing compliance with the Individual Conduct Rules, staff are made aware of the types of actions that could lead to a breach of the COCON rules, as set out in COCON 4.1. In our recruitment, induction and training sessions, staff are made aware of which rules apply to them and their role within the business and are given specific guidelines relevant to each rule.

5.1 Individual Conduct Rules

The below guidance helps employees to understand their obligations when complying with the conduct rules and the types of actions that could result in a breach of the rules. Staff are made aware that the guidance is not exhaustive and have continual access to personnel who can direct them on specific obligations and responsibilities.

5.1.1 Act With Integrity

Staff must not (or attempt to) mislead clients, colleagues, the Company or any associated regulator in any way or falsify, destroy, or cause the destruction of documents or information. All information must be accurate and a true representation of the facts and should have supporting evidence where risks are involved. Staff must pay due regard to the interests of the customer and must be aware of and report suspected breaches of the COCON rules with immediate effect

5.1.2 Act With Due Care, Skill and Diligence

Staff are made aware that this rule holds even more importance where activities might affect customers or the integrity of the financial system. Customers, the Company and regulators (where applicable), must be informed of any risks involved, as well as charges and/or penalties associated with a product or service. Any conflict of interest is to be disclosed at the start of a relationship/transaction and any advice given must be fully supported and be from an expert source with full understanding of the activities involved.

Managers understand that they must be knowledgeable about the business unit for which they are responsible and recognise that their role involves continual learning and development. Managers are monitored to ensure that they take full responsibility of their business area and that it is controlled effectively and complies with the relevant requirements and standards of the regulatory system. Effective and adequate oversight is mandatory, as are a full knowledge and understanding of the risks involved in their specific business area.

5.1.3 Be Open & Cooperative With All Regulators

Where a person holds a position that makes them responsible for reporting matters to a regulator (i.e. FCA, PRA); they are expected to do so within the timeframes and deadlines set out in the FCA handbook. Such staff will be provided with training on how, where and when to report such matters and will be monitored to ensure that they comply.

5.1.4 Pay Due Regard to the Interests of Customers & Treat Them Fairly

All staff are made aware of this rule and are provided with dedicated training on the TCF outcomes and how to treat customers fairly. This rule applies to all staff, whether they are customer facing or not, and ties in with one of the FCA’s main principles of business. Staff are made aware that they must always keep customers informed and that such provisions are accurate and are provided in clear detail. Customers are kept aware of any risks, charges, penalties and circumstances that may negatively affect them; and any advice given is based on an expert knowledge of the activity.

5.1.5 Observe Proper Standards of Market Conduct

The Company endeavours to comply with the relevant market codes and exchange rules and as such, staff can comply with this individual conduct rule. All staff with roles relevant to this rule are kept fully aware of the relevant market codes and exchange rules and are monitored on a continual basis for compliance.

5.2 Senior Manager Conduct Rules

5.2.1 Effective Control

SM1 – Take Reasonable Steps to Ensure that the Business of the Firm for Which You Are Responsible is Controlled Effectively

Each SMF manager’s role and responsibilities are set out in the statement of responsibilities (SoR), a copy of which is given to the manager, held with HR and is provided to the FCA. The SoR is reviewed regularly and is individual to each managers role and obligations. The organisation of the Company and the responsibilities of those within it are clearly defined, as are reporting lines. Any authorisations given to a manager are communicated to staff and all employees have job descriptions of which they are aware.

Those obligated under the senior conduct rules are responsible for taking reasonable steps to satisfy themselves that each area of the business for which they are responsible has appropriate policies and procedures for reviewing the competence, knowledge, skills and performance of each individual member of staff. The Company has procedures for all business activities and has defined policies and procedures for monitoring compliance in these areas.

The Company have ensured that there is a seamless and structured transition when another employee is to take over the role of a function governed by the senior conduct rules. The Company has dedicated SMF Handover Policy & Procedures that provide a comprehensive set of handover notes for the successor and specify at a minimum: –

• How the successor is to perform their function effectively
• Ensuring compliance with the requirements and standards of the regulatory system
• Ensuring that the individual with overall responsibility for that part of the business of the Company maintains effective control

The Company defined ‘effective control’ as noted in SC1, as taking reasonable steps for all areas of business under the remit of the senior manager; apportioning responsibilities clearly among those to whom responsibilities have been delegated and defining clear and accessible reporting lines; authorisation levels; and job descriptions. Senior managers are expected to assess and monitor staff within their business unit and to continually review the competence, knowledge, skills and performance of those individuals.

5.2.2 Comply With Standards

SM2 – Take Reasonable Steps to Ensure that the Business of the Firm for Which You Are Responsible Complies with the Relevant Requirements & Standards of the Regulatory System

The Company have a dedicated [compliance manual/compliance program] that contains our policies and procedures for complying with all relevant regulatory rules, requirements and guidelines. All staff are made aware of and are given access to these documents and have frequent training sessions and refresher courses on the FCA rules and regulations.

We have a dedicated compliance monitoring program and utilise checklists for the main financial and regulatory compliance areas, with all staff being made aware of their obligations and the importance of complying with the rules. Where a senior manager is responsible for a specific business unit, they are obligated to ensure that each activity and function has structured operating procedures and systems with well-defined steps for complying with the detail of relevant requirements and standards of the regulatory system and for ensuring that the business is run prudently and effectively.

Staff are made aware of the breach protocols and reporting requirements within their area of responsibility and understand the necessity to deal with such matters in a timely and appropriate manner. We have dedicated change management procedures that are followed for business areas and activities that are reviewed and require change or updating and staff are aware of the process for change, including carrying out cost benefit analysis.

5.2.3 Effective Delegation

SM3 – Take reasonable steps to ensure that any delegation of your responsibilities is to an appropriate person & that you oversee the discharge of the delegated responsibility effectively

Senior managers are responsible for implementing and monitoring adequate and appropriate systems of control to comply with the relevant requirements and standards of the regulatory system and for implementing recommendations for improvements in systems and procedures where a review deems this necessary.

All senior conduct rules staff members are also responsible for ensuring that the necessary authority, resources, expertise and access to all relevant information are made available within their business unit and to ensure that where any function or activity is delegated, the responsible person is competent and appropriate for overseeing the delegated responsibility effectively.

Those who delegate out any portion of their responsibilities retain their conduct rules obligations and are required to monitor the delegated activities and persons, as well as obtaining frequent reports on any issues.

5.2.4 Regulatory Disclosures

SM4 – Disclose appropriately any information of which the FCA or PRA would reasonably expect notice – the Company recognises that this rules complements (as oppose to replacing) rule 3 in COCON 2.1.3R and that senior conduct rules staff members are likely to have access to greater amounts of information of potential regulatory importance and are expected to have the expertise to recognise when this may be something of which the appropriate regulator would reasonably expect notice.

Those with senior conduct rule obligations are given additional training to understand the types of information that may need to be relayed to the regulators and of the methods and timeframes for doing so. When determining whether or not a person’s conduct complies with rule SC4 in COCON 2.2.4R, the factors which the FCA would expect to consider include: –

• whether it would be reasonable for the individual to assume that the information would be of material significance to the regulator concerned
• whether the information related to the individual themselves or to the Company
• whether any decision not to report the matter was taken after reasonable enquiry and analysis of the situation

6 Responsibilities

The Company will ensure that all staff and senior managers are provided with the time, training and support to learn, understand and comply with this policy and any associated documents and rules.