Senior Managers and Certification Regime Policy Document and Template Guidance | Multiple Senior Management Functions Roles | FCA Handbook | Template for FCA Applications and Authorised Firms

1 Introduction

1.1 Senior Managers & Certification Regime (SM&CR)

The Senior Managers and Certification Regime (SM&CR) already applied to most FCA regulated firms from 9^th December 2019; (except for any exempt firms and FCA-approved persons who are approved persons of firms that are not SMCR firms; or to approved persons approved to perform a controlled function in accordance with SUP 10A.1.15R to SUP 10A.1.16BR (appointed representatives).

As of the above date, any FCA-approved person(s) of an SMCR firm now has obligations under COCON as oppose to APER. SMCR firms also have new FCA obligations under SUP 10C, COCON and SYSC 23-27.

There are 3 tiers under the SM&CR:

Core: firms in this tier must comply with the baseline requirements.

Enhanced: this applies to a small number of firms whose size, complexity and potential impact on consumers or markets warrant more attention. These firms have extra requirements.

Limited Scope: this applies to firms who already had/have exemptions under the Approved Persons Regime. These firms are exempt from some baseline requirements and typically have fewer senior management functions.

[IMPORTANT NOTE ABOUT TIERS: Refer to the FCA’s SM&CR Guide to determine which tier of SMCR firm you are. To ensure a full coverage of the new SMCR rules and guidelines, we have covered all three tiers in this document, so it is essential that you understand which tier applies to your firm and that you customise the SMCR content sections to suit your requirements and obligations (i.e. only 6 of the SMF’s apply to the Core tier and only 5 of the Prescribed Responsibilities)].

2 Senior Management Functions (SMF’s)

A Senior Management Function (SMF) is a type of controlled function under the FSMA. There are different functions that apply depending on the type of firm involved. People performing these functions are referred to as Senior Managers and are usually senior people within an organisation, holding positions and/or performing functions with the potential to cause the greatest harm or impact upon customers and/or market integrity.

There are a number of requirements set by the FCA for those holding a SMF, which are covered in this document. Any individual performing a SMF needs to be approved by the FCA before they can start their role.

2.1 FCA-Designated Senior Management Functions (Sup 10c)

Each function noted in the below table is an FCA controlled function. In accordance with section 59(6A) of the Financial Services and Markets Act 2000, the FCA designates each of these controlled functions as a Senior Management Function (SMF).

The Company takes reasonable care to maintain a clear and appropriate apportionment of significant responsibilities among its directors and senior managers in such a way that: –

1. It is clear who has which of those responsibilities; and
2. The Company and its affairs can be adequately monitored and controlled by the directors, relevant senior managers and/or any relevant governing body

We utilise a Senior Manager Register and responsibilities map to document who holds each relevant Senior Management Function (SMF) and ensure that such records satisfy SYSC 2.1.1 R of the FCA Handbook and are kept up to date. The apportionment of functions in the register are retained for six years from the date on which it was superseded by the most recent up-to-date record.

In accordance with Section 59ZA(2) of the FSMA, we acknowledge that a function is defined as a ‘senior management function’ where: –

• The function requires the person performing it to be responsible for managing one or more aspects of the Company’s affairs, so far as relating to the activity; and
• Those aspects involve, or might involve, a risk of serious consequences:
  • for the Company; or
  • for business or other interests in the UK

2.2 Senior Managers

The FSMA, as amended by the Financial Services Act 2012, enables the PRA and FCA to specify a function within a business as a Senior Management Function (SMF) and any individuals performing such a role are required to be pre-approved by the FCA.

The Company recognises that its Directors and Senior Managers are in positions within the business that could have the greatest impact upon market integrity; and as such we are committed to ensuring that our senior employees understand their obligations and responsibilities under the FCA’s SM&CR, FIT, SYSC and COCON rules and guidelines. Senior employees are also aware of their duty of responsibility obligations and that they personally may be held accountable for any breaches should they have failed to ensure adequate measures and controls.

The company understands that when applying for regulatory pre-approval for these individuals (referred to as Senior Managers), we are duty bound to include a Statement of Responsibilities (SoR) setting out the areas of our business in which the prospective Senior Manager will be responsible for managing. An SoR is a single document that every Senior Manager has, and which clearly sets out their role and responsibilities.

Where the Company has or intends to, apply for a Senior Manager to be approved, we ensure that a Statements of Responsibilities (SoR) is sent with Form A (the application) and that the details on the SoR is kept up to date at all times. The Company maintains a complete and up-to-date set of current statement of responsibilities for all our SMF managers.

SMF roles can include, but are not limited to: –

• Heads of key business areas meeting certain quantitative criteria
• Individuals in group or parent companies exercising significant influence on the firms’ decision-making
• Where appropriate, individuals not otherwise approved as Senior Managers but ultimately responsible for important business, control or conduct-focused functions within the firm.

The company confirms that we record and review all Senior Management Function (SMF) roles within the company and have applied to the FCA for approval of each SMF Manager. SMF Managers meet our and the FCA’s high standards for integrity, honesty, experience and role knowledge as well as undergoing extensive training and handover procedures in readiness for their role and responsibilities.

2.2.1 Statement of Responsibility (SOR)

[The FCA have already released an SoR to be used for this purpose, so we have included a copy on with your pack as some firms are unable to use hyperlinks. PLEASE NOTE that the SoR is the property of the FCA and has been provided for use as per their direction and is not one of our own templates.]

2.2.2 Multiple SMF Roles & Temporary Oversight

The Company uses one SoR for each Senior Manager who holds one or more SMF’s within the organisation. Where a person holds more than one function, these have been detailed on the SoR and approval for each SMF has been obtained from the FCA.

The Company acknowledges that where there is a need for temporary cover of a Senior Manager and one or more of their function roles, this cover can be appointed without FCA authorisation, with the provision that the temporary oversight does not exceed 12 consecutive weeks.

2.3 Responsibilities Map

A Responsibilities Map supports the individual Statements of Responsibility (SoR) but are only required by enhanced firms. They provide an overview of how a firm is managed and governed and offer guidance and support for internal and external individuals on understanding the firms structure and who has been allocated which responsibilities.

The Company have developed a structured, but easy to follow map that denotes all employees holding one or more SMF’s and details their position, prescribed responsibilities, overall responsibilities and reporting lines. The map also includes organisational structure charts and a summary of any relevant boards and/or committees.

[These apply to enhanced firms only and we have included a template for completing your responsibilities map in with your pack and you can refer to the FCA’s GC18/4 for examples of how-to layout your map and what to include. All requirements are outlined in SYSC25.]

2.4 Prescribed Responsibilities (PRs)

The Company understands its obligations to allocate the FCA’s prescribed responsibilities, as laid out in SYSC 24 of the handbook to approved Senior Managers. These prescribed responsibilities are in addition to any SMF role already held and aim to make the Senior Manager/s accountable for key conduct and prudential risks.

The prescribed responsibilities that have been allocated to one or more Senior Manager are the responsibility for: –

1. the Company’s performance of its obligations under the senior managers regime, including: –
   a. compliance with conditions and time limits on approval;
   b. compliance with the requirements about the statements of responsibilities (but not the allocation of responsibilities recorded in them);
   c. compliance by the Company with its obligations under section 60A of the Act (Vetting of candidates by authorised persons); and
   d. compliance by the Company with the requirements in SYSC 22 (Regulatory references) so far as they relate to the senior managers regime, including the giving of references to another firm about an SMF manager or former SMF manager
2. the Company’s performance of its obligations under the employee certification regime
3. the Company’s policies and procedures for countering the risk that Company might be used to further financial crime, including: –
   a. the Company’s policies and procedures in relation to the matters in SYSC 3.2.6R (Systems and controls in relation to compliance, financial crime and money laundering);
   b. the functions in SYSC 3.2.6HR or SYSC 6.3.8R (firm must allocate to a director or senior manager overall responsibility within the firm for the establishment and maintenance of effective anti-money laundering systems and controls);
4. the Company’s obligations for conduct rules training; and conduct rules reporting
5. leading the development of; and monitoring the effective implementation of policies and procedures for the induction, training and professional development of all members of the Company’s governing body
6. monitoring the effective implementation of policies and procedures for the induction, training and professional development of all the firm’s SMF managers; and key function holders
7. safeguarding the independence of; and oversight of the performance of: –
   a. the internal audit function, in accordance with the internal audit requirements for SMCR firms and the associated PRA requirements
   b. the performance of the compliance function in accordance with the compliance requirements for SMCR firms
   c. the risk function, in accordance with the risk control requirements for SMCR firms and the associated PRA requirements
8. overseeing the development of and implementation of the Company’s remuneration policies and practices in accordance with SYSC 19
9. the Company’s compliance with CASS (where applicable)
10. compliance with the requirements of the regulatory system about the management responsibilities map
11. acting as the Company’s whistleblower’s champion
12. providing for an effective internal audit function in accordance with the relevant sections of the PRA Rulebook and overseeing the performance of the internal audit function
13. management of the Company’s risk management processes in the UK
14. the Company’s compliance with the UK regulatory system applicable to the firm
15. the escalation of correspondence from the PRA, FCA and other regulators in respect of the Company to each of the governing body or the management body of the Company and, as appropriate, of the firm’s parent undertaking and the ultimate parent undertaking of the Company’s group

[Refer to the SM&CR Instruction Sheet included with your pack for more information on the mandatory policies and templates available for PR (d), (z) and (j-3)]

2.4.1 SMF Manager Handover Policy (Enhanced Firms)

[We have included an SMF Handover Policy template in your pack. You will need to customise the procedures section and also develop your own template for a SMF Handover Document as this is specific to each function, role and business. The SMF handover procedures apply to Enhanced Firms only and should be customised to suit your business type, permission type and regulatory obligations.]

3 Certification Regime

Within many FCA authorised organisations, there are roles and functions that can or may have a significant impact on customers, market integrity or the business itself. Where this role has not already been defined as a Senior Management Function (SMF), the role is known as a Certification Function. In accordance with section 63E of the FSMA, a function is an FCA Certification Function only if, in relation to the carrying on of a regulated activity by a firm, that function: –

• is not a controlled function in relation to the carrying on of that regulated activity by that company; and
• will require the person performing it to be involved in one or more aspects of the company’s affairs, so far as relating to that regulated activity

The Company recognises that such roles and functions could result in significant-harm if breaches occurred and ensure that any employee performing an FCA certification function, has been assessed and certified as adequate and fit for performing the role and have been issued a certificate to perform that function.

Certification Functions are: –

• CASS oversight (SYSC 27.8.1R)
• Proprietary trader (SYSC 27.8.3R)
• Significant management (SYSC 27.8.4R)
• Functions requiring qualifications (SYSC 27.8.10R)
• Managers of certification employees (SYSC 27.8.13R)
• Material risk takers (SYSC 27.8.14R)
• Client-dealing (SYSC 27.8.18R)
• Algorithmic trading (SYSC 27.8.23R)

3.1 Issuing & Renewing Certificates

All reasonable care has been taken to ensure that no employee of the Company performs an FCA certification function unless the employee has a valid certificate issued by the Company and has been assessed as fit and proper to perform such a function. Such assessments have regard as to whether the employee: –

• has obtained a qualification;
• has undergone, or is undergoing, training;
• possesses a level of competence; or
• has the personal characteristics required by general rules made by the FCA

The process and criteria for assessing both SMF roles and certification function is set out in the FIT section of this manual and are in accordance with the FCA’s guidelines in this area and with section 63F of the FSMA. Any issued certificate to perform an FCA certification function: –

• states that we are satisfied that the person is fit and proper to perform the function to which the certificate relates; and
• sets out the aspects of our affairs in which the person will be involved in performing the function
• is valid for a period of 12 months, beginning with the day on which it is issued

Where any certified employee’s role changes part way through a 12-month certificate, the Company will reissue a new certificate for the new and/or additional roles and will also reassess the employee’s fitness to perform the new function/s where the differing requirements relate to: –

• personal characteristics;
• the level of competence, knowledge and experience;
• qualifications; or
• training

The FCA have defined the Significant Management Certification Function as applying to people below Senior Managers who are responsible for business units that, because of their size, nature or impact, are considered significant by the company. The Company have assessed its business units based on the factors below when making our determination about which units and functions are significant: –

• the size and significance of the Company’s business in the UK
• the risk profile of the unit
• the unit’s contribution to the Company’s capital requirements
• its contribution to the profit and loss account
• the number of employees, Certification Functions or Senior Managers in the unit
• the number of customers served by the unit

3.1.1 Certification Function Certificate

[We have included a certificate template in your pack which covers the mandatory FCA requirements. However, certificate formats and contents should be customised to suit your organisation type and the associated roles.]

4 Due Diligence for SMF/CF Roles

The Company recognises the need to perform due diligence on any individual being appointed to a Senior Management Function (SMF) or Certification Functions (CF), to ensure that they meet the FCA’s criteria and competency for the role. We have developed a bespoke due diligence questionnaire that is used for each individual prior to their role appointment that enables us to validate and assess their background, suitability, skill & competence level and ability to perform the relevant SMF/CF role(s).

We also utilise a checklist which has been designed to ensure that as a company, we are meeting our FIT and SM&CR obligations and have adequately and effectively assessed each individual who has (or will be) appointed to a SMF/CF role.

4.1 Validation & Assessment

The service that the Company offers is only as compliant and effective as the staff that we employ, which is why we utilise strict selection, recruitment, onboarding, due diligence, induction and training procedures for all employees. We understand both our obligation and the FCA’s regulations embedded in the SM&CR rules to ensure that additional due diligence, references and evidence of an employee’s background and skill level are assessed, verified and evidenced where such employees are to take on senior management roles.

Evaluation areas for each candidate during recruitment and SMF consideration includes: –

• Educational Background
• Experience
• Qualifications
• Presentation
• Match Person Specification Requirements
• Communication Skills
• Management/Leadership Skills
• Overall Impression

The Company utilise a Due Diligence Questionnaire for assessing and validating individuals who are appointed to SMF/CF roles, which includes evidencing general and role specific information, as detailed below.

[ADD/DELETE YOUR CONTROLS AS APPLICABLE]

• Collection and analyse basic identity information (using the Due Diligence Questionnaire)
• Obtain evidence documents to support an Individual’s Identity:
  • Passport or Photo Card Drivers Licence (or other government issued document)
  • Proof of Residential Address (dated within last 3 months)
• Obtain evidence documents to support a Legal Entity (where applicable):
  • Full Legal Name & Certificate of Incorporation
  • Registered office in country of incorporation and business address
• Use ID and gathered information to carry out background checks with reputable source, to include:
  • Background check
  • Credit Check
  • ID Check
  • Address Confirmation

Previous Trading Status & Directorships (if applicable)

[Note: Any due diligence or employee related documents or content contained in this pack does not cover your standard HR obligations or due diligence for employees as a whole – it is for the sole use of appointing and validating SMF/CF individuals. You will require your own Due Diligence, Induction and Recruitment policies and procedures to be in place in addition to anything covered in this pack.]

[The Questionnaire has been included in your SM&CR pack]

4.2 Fitness & Propriety Assessment

The questionnaire completed for all SMF/CR roles is used in conjunction with our Fitness & Propriety (FIT) Assessment Record, which is completed for all new starters to an SMF/CF role, as well as annually for a FIT assessment review.

Please see section 5 of this document for details on our FIT Assessment process.

4.3 Induction for SMF/CF Roles

[The below information and included Induction Checklist do not replace your HR processes for recruitment and induction. This is a separate document used only for those being newly appointed to a SMF/CF role and should be customised to match your business type, obligations and requirements.]

Induction into a SMF/CF role is for both new starters within the company who have been appointed specifically to undertake such a role, and for existing employees promoted or moved into a SMF/CF role. As such roles hold a major significance for the company and regulatory requirements, we have created an Induction Checklist to help embed and support those new to the role.

4.3.1 New Starters

When recruiting, interviewing, selecting and appointing to a SMF/CF role, the Company follows its existing HR processed in these areas. We also utilise the standard induction period and checklist for new starters to the company, so that they are fully aware of the structure, layout and processes of the company before undertaking their SMF/CF role.

All standard induction processes, checks and periods are completed before the SMF/CF role is undertaken. This ensures that the new employee understands the company’s activities, functions and processes before starting the induction in to the SMF/CF position.

4.4 Induction Process & Checklist

For new and existing employees, it can be daunting taking on a position that holds such significance and impact as a Senior Manager or Certification Function. The Company understands that those appointed to such roles may need extra support initially, which is why we have developed a dedicated SMF/CF Induction Checklist.

The checklist is used to assess if an individual is ready to perform the SMF/CF role unsupervised and to verify that they have adequate resources to perform the role. It also aids the Company in checking if the employee is aware of their responsibilities and any implications of the role.

[An SMF/CF Induction Checklist has been included in your pack]

5 Fitness & Propriety (FIT)

5.1 Introduction

Assessing, testing and assuring the fitness and propriety of any employee carrying out a Controlled Function; Senior Management Function; and/or a Certification Function is mandatory for all firms and ensures that roles and functions that could pose a significant impact or risk to customers; market integrity; and/or the business itself, are filled by personnel who are qualified, competent and capable of performing such a role and who have been assessed in accordance with the criteria set out in the FCA’s FIT handbook module.

The implementation of the SM&CR rules further enforce that firms and their employees are accountable for performing their roles effectively and accurately. Assessments of such employees are carried out continually and at a minimum of annually.

5.2 Fit & Proper Testing

The Company understands its obligations under the FIT criteria and recognises that the FCA may only grant an approved status or certification where it is satisfied that the individual is fit and proper to perform the Controlled/SM Function for which they are applying.

When assessing individuals as part of the fit and proper tests, the Company considers the persons: –

• honesty, integrity and reputation
• competence and capability
• financial soundness

The Company also takes into consideration the function/s to be performed and assess if the candidate can perform these functions in a suitable and skilled manner. In doing so, we consider the below factors for whether the person: –

• has obtained a qualification
• has undergone, or is undergoing, training
• possesses a level of competence to perform the function
• has the personal characteristics to perform the function

The company confirms that all individuals who are applying for/currently* performing a SMF and/or Certification Function, have met the FCA’s requirements in this area and are suitable, skilled and able to perform the function for which they are (or will be) responsible.

In addition to the above qualities and factors, when assessing the fitness and propriety of an employee being assessed under FIT, the Company also considers: –

• the nature, scale and complexity of the business
• the nature and range of financial services & activities undertaken in the business
• whether the candidate has the knowledge, skills and experience to perform the specific role

Where such a position is to be within the management body of the Company, we ensure that the candidate being assessed possesses an adequate knowledge, skills and experience to understand our activities and the functions, roles and business unit(s)that may come under their management remit.

The Company recognises that when determining a candidate’s fitness and propriety to perform a function defined in FIT, we must also consider the person’s competence and capability. In accordance with FIT 1.1.2G, we give regard to all relevant matters including but not limited to; whether the person: –

• satisfies the relevant FCA training and competence requirements in relation to the function the person performs or is intended to perform
• has demonstrated by experience and training that they are suitable, or will be suitable if approved, to perform the function
• has adequate time to perform the function and meet the responsibilities associated with that function

5.3 Evidence of Fitness & Propriety

To support the assessment of individuals whom the Company wishes to appoint to a function for which FIT applies, we understand that gathering evidence to support the fit and proper test is an essential part of the assessment process.

The Company utilises the criteria set out in FIT to ensure that we have collated and retain the appropriate and mandatory evidence to support fitness and propriety tests. Our HR processes for recruitment and induction have been revised to include the below measures where an employee or candidate is being considered for senior management positions. Checks on criminal records and background checks are processed on an annual basis for the duration of the senior management position

5.3.1 References

The Company understands its obligation to take reasonable steps to obtain appropriate references in relation to SYSC 22.2 of the FCA Handbook, where we, as an SMCR firm are considering: –

• Permitting or appointing someone to perform a controlled function; or
• Issuing a certificate under the certification regime for that someone;

Such references are obtained from the considered persons current employer; and from anyone who has been their employer within the past six years.

The Company utilises and understands SYSC 22.2.3 in relation to which positions require a reference and when which references must be obtained. Where we are appointing someone to perform an FCA controlled function or a PRA controlled function, we ensure that any reference is obtained one month before the end of the application period. Where the considered appointee has not yet disclosed the application to their current employer, we reserve the right to obtain such a reference at the end of the application period.

The Company understands its obligations to give and request references under SYSC 22.2 and abide by any timeframes, information requests and disclosures set out in this section of the handbook.

The Company recognises that where we are requesting (or being the subject of a request for) references for an employee, we should: –

• Request a reference from all previous employers in the past 6 years
• Share information between firms in a standard template
• Disclose certain information going back 6 years (i.e. disciplinary action, breaches of the Conduct Rules, findings that the person was not fit and proper etc)
• Disclose any other information relevant to assessing whether a candidate is fit and proper (i.e. complaints) & retain records of disciplinary and fit & proper findings going back 6 years
• Not enter into arrangements that conflict with our disclosure obligations

5.3.2 Criminal Records Checks

Where the candidates will be (or are currently) carrying out an SMF; the Company is obligated to declare to the FCA if a candidate has a criminal record. We also undertake a criminal record check as part of each Senior Manager application for approval to verify the information obtained from the candidate and to support the application being submitted.

The Company obtain application forms from the [Disclosure and Barring Service (DBS) in England and Wales; Disclosure Scotland in Scotland or AccessNI in Wales] and ask the candidate to complete the form and return it to their line manager. The [Line Manager/HR/Compliance Manager/Responsible Person] then sends the completed application form to the DBS and asks the candidate to show produce the certificate as soon as they receive it from the DBS. We do not complete any due diligence or fitness assessment certification until all forms and checks have been completed and returned.

Whilst we recognise that carrying out criminal records checks for Certification Functions is not mandatory, the Company carries out such checks with the permission of the candidate to ensure that the person being assessed meets the standard fitness and propriety criteria.

5.4 Training

The Company have implemented a structured and flexible training and development program which has been designed to help employees become more effective and confident in their role and to promote best practice and idea sharing within the organisation. By assessing, improving, updating and refining employee knowledge, skills and understanding, the Company recognises the benefit to both individual and company.

Our approach to training and development is multi-faceted, with activities including: –

• Internal workshops and training sessions
• Training sessions dedicated to the Conduct Rules
• External courses and training
• Coaching and mentoring
• Support groups and peer-to-peer learning
• Assessments and gap analysis
• Conferences and seminars
• Work shadowing and cross-department learning

The Company understands that training and development is a continuous process and in certain legal and regulatory areas, it is essential to stay ahead of any changes and developments and to ensure that staff are up to date in their knowledge and skills. We allocate ample resources, support and funding for training and development endeavours and have a dedicated Training Officer who is responsible for the oversight of management and employee training needs, course allocation and gap analysis.

5.4.1 Conduct Rules Training

The Company understands that it has an obligation under section 64b of the FSMA and COCON 2.3 to provide senior managers, directors and most employees with training and a detailed understanding of the Conduct Rules that apply under the SM&CR.

We have developed a training program that covers the Conduct Rules as outlined in section 5 of this document and have identified all employees who require training in either/both tiers.

[As much of the training material applied under the SM&CR Conduct Rules is business and role specific; it is important that each firm develops their own training workshops and customises the content for each SMF/CF role.

However, we have added an SM&CR Guidance Training Notes document to your pack, which offers some advice, examples and guidance for developing and delivering successful and compliant training.]

5.5 Fitness & Propriety Assessment Record

The Company have created an assessment record template which is used in conjunction with our Due Diligence Questionnaire for assessing the honesty, integrity, reputation, competence, capability, skill and financial soundness of all employee appointed to (or already carrying out) an SMF/CR role. This assessment enables us to collate and review information and supporting evidence about each employee, to evidence and ensure that they are suitable and fit to perform the role they have been appointed to.

The assessment is carried out on all new starters appointed to an SMF/CR role; those already undertaking such a role who have not yet been assessed, and annually as part of our FIT review assessment. The Company will also conduct a reassessment of the FIT criteria where any issues or changes have arisen that may affect the results of a previous assessment conducted on an employee appointed to an SMF/CR role.

[A template assessment record is included in your SM&CR pack.]

6 Conduct Rules (COCON)

6.1 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 senior manager 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.

Our breach assessment and reporting procedures are separate from this document and should be referred to in conjunction with any reports made to the FCA as categorised in this area.

[You can link or add the location of your breach incident procedures document here.]

6.2 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)

6.2.1 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

6.3 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

6.4 Conduct Rules Training

The FCA have been given powers under Section 64b of the FSMA to make rules about the conduct of certain employees within a firm. These rules and associated requirements are outlined under the COCON sourcebook in the FCA Handbook and are known as the Conduct Rules. In addition to creating 9 rules for conduct, the FCA have also outlined their requirement for those employees obligated under the rules to be trained in and have a full understanding of those Conduct Rules.

As part of their fitness and propriety responsibilities, firms are expected to offer training to all relevant employees on the Conduct Rules and to evidence that training and the employees’ understanding. Each firm regulated under the Senior Managers & Certification Regime (SM&CR) must develop adequate and effective training programs that cover the Conduct Rules and are relatable to each employee and their job role, as well as allocating a Senior Manager the Prescribed Responsibility (PR) for the training development and delivery.

The Company have developed a robust and compliant training program based on the Conduct Rules and how they apply to the relevant roles and functions performed within the organisation.

[We have included a detailed Conduct Rules Training Guidance document within your pack to help you to develop and deliver adequate and effective training in this area.]