Conduct rules update for your front and back office staff
On 31 July 2023, the FCA's new Consumer Duty comes into force. The Duty applies to firms that determine or have a material influence over retail customer outcomes. It therefore applies to all firms operating in the retail market, irrespective of whether the firm has a direct relationship with the customer.
The Duty introduces specific rules for retail financial services firms and their employees. Breaches could result in regulatory penalties, including fines. It is therefore important that everyone understands their personal responsibilities under the Duty.
Here are three key reminders to share across your firm. A PDF version can be downloaded here.
- Individual conduct rules: Conduct Rule 6 requires staff to ‘act to deliver good outcomes for retail customers.’ The rule applies to all staff whether or not they have direct dealings with customers. To comply with Rule 6, you must:
Act in good faith towards retail customers
Avoid causing foreseeable harm to retail customers
Enable and support retail customers to pursue their financial objectives
- Senior Manager conduct rules: Individuals who perform a senior management function (SMF) are subject to additional Conduct Rules, which set out specific management obligations.
The Consumer Duty places further expectations on SMFs under the existing SM&CR Duty of Responsibility and the Senior Manager Conduct Rules.
Therefore, every senior manager must clearly understand the role they play in ensuring that the firm acts to deliver good outcomes for retail customers.
- Consumer outcomes: The outcomes set more detailed expectations in relation to four key areas:
Products and services must be designed to meet the needs of consumers and distributed appropriately
Consumers should receive fair value from products and services
Communications should support consumer understanding and enable customers to make properly informed and effective decisions
Firms must provide a level of consumer support that meets customers’ needs throughout the customer journey
A good compliance culture results in everyone in the organisation working towards a common goal which is aligned with the firm’s values and the regulator’s expectations.
Download Your Spaced Learning Card
Compliance risks impact the whole business. Our series of Spaced Learning Cards incorporate current examples and provides high-level practical guidance for firms to share with employees. Topics include the risks of hybrid working, greenwashing, sanctions, bribery risk and more. Download your free Spaced Learning Cards to remind staff of their compliance obligations.