Conduct Rules COCON and Breach Reporting | First and Second Tiers | Mortgage Conduct of Business MCOB | Template for FCA Applications and Authorised Firms

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Conduct Rules (COCON)

13.1 Introduction

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 SM functions. The conduct rules make up an enforceable set of standard rules focusing on good personal conduct and having structured criteria upon which to hold people accountable. These rules can help to shape the culture, standards and policies of firms as a whole and promote positive behaviours that reduce harm.

13.2 Conduct Rules

The Company employs a top-down approach when it comes to conduct within the business and enforce the rules and ethos across the Company as a whole. We recognise that the conduct rules are in place to protect individuals, customers and our business and we strive to ensure a complete awareness of the rules and implement processes that monitor and aid compliance with the rules.

All employees are made aware that the conduct rules apply to all: –

• Senior Managers
• Certified Functions
• Non-Executive Directors who are not Senior Managers
• Other employees (with the exception ancillary staff as set out in table 6(A) of FCA handbook section COCON 1.1.2)

13.2.1 Conduct Tiers

The Company advocates understanding and knowledge of the conduct rules and utilise noticeboards, employee handbooks, coaching sessions, training, screen-prompts and other forms of dissemination to repeat and remind all employees of their obligations and responsibilities. As an SMCR firm, the Company ensures that all person’s subject to the rules in COCON are notified of the rules that apply to them; and take all reasonable steps to ensure that those persons understand how the rules in COCON apply to them.

First Tier – Individual Conduct Rules

1. You must act with integrity
2. You must act with due care, skill and diligence
3. You must be open and cooperative with the FCA, the PRA and other regulators
4. You must pay due regard to the interests of customers and treat them fairly
5. You must observe proper standards of market conduct

Second Tier – Senior Manager Conduct Rules

1. You must take reasonable steps to ensure that the business of the firm for which you are responsible is controlled effectively
2. You must take reasonable steps to ensure that the business of the firm for which you are responsible complies with the relevant requirements and standards of the regulatory system
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
4. You must disclose appropriately any information of which the FCA or PRA would reasonably expect notice

13.3 Conduct Rules Breach Reporting

The Company recognises its obligation to notify the FCA when any disciplinary* action has been taken against a person for a conduct rules breach. Where the breach relates to a Senior Manager, we will notify the FCA within 7 business days of concluding disciplinary action using Form D (as referred to in SUP 15.11 of the FCA handbook). For any other individuals, we will notify the FCA on an annual basis using REP008 via GABRIEL.

*For the purposes of this section, disciplinary action means issuing of a formal written warning; suspension or dismissal of a person, or reduction or recovery of remuneration (clawback)

The company recognises its obligation to make an annual notification to the FCA regarding the conduct rules even in cases where no breaches have occurred, to ensure that our monitoring and identification of such breaches if adequate and accurate.

When assessing if an act or individual has breached the COCON rules, the Company considers: –

• whether the individual exercised reasonable care when considering the information available to them
• whether the individual reached a reasonable conclusion upon which to act
• the nature, scale and complexity of our business and activities
• the individual’s role and responsibility as determined by reference to the relevant statement of responsibility (SoR)
• the knowledge the individual had, or should have had, of regulatory concerns, if any, relating to their role and responsibilities

Please refer to our SM&CR Program for our policies and templates on the Conduct Rules.

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