The extension means that insurers are subject to elements of the SMCR which have not been applied to them previously such as the Certification Regime, handover procedures and the statutory duty of responsibility. In addition, almost all employees of insurers are now subject to the Conduct Rules.

Which firms are covered by the conduct rules?

The Conduct Rules apply to a firm's regulated and unregulated activities (including any related ancillary activities) and are applicable to all Senior Managers; those carrying out Certified Functions; all Non-Executive Directors and any other employee not designated ancillary staff (i.e. HR admin, catering, cleaners, ...

When did SMCR come into effect for insurers?

SMCR comes into force for all FCA-regulated firms on 9 December 2019.

Who does the FCA certification regime apply to?

The Certification Regime applies to those individuals carrying out specific functions (Certification Functions) for a firm that can have a significant impact on the firm or its customers but are not Senior Management Functions.

What are the FCA conduct rules?

Conduct Rules

• Rule 1: You must act with integrity.
• Rule 2: You must act with due skill, care and diligence.
• Rule 3: You must be open and cooperative with the FCA, the PRA and other regulators.
• Rule 4: You must pay due regard to the interests of customers and treat them fairly.

Insurer Conduct Risk explained by Tim Kirk

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Who is exempt from conduct rules?

The only individuals exempt from SMCR Conduct Rules are ancillary staff. These are defined by the FCA as employees whose job does not directly relate to financial services, such as receptionists, security guards, medical staff, IT support and cleaners.

What are the code of conduct rules?

A code of conduct is a set of rules outlining the norms, rules, and responsibilities or proper practices of an individual party or an organization.

Do FCA conduct rules apply overseas?

So in fact for employees based overseas, Conduct Rules only apply to those already caught by the SMR and the CR for the reasons listed above. The only exception is for Non-Executive Directors who are not Senior Managers or Certified Individuals, for whom the Conduct Rules apply regardless of where they are based.

What are the 3 main elements of the Senior Managers and certification regime?

There are three main elements to the regime: (1) the senior managers regime; (2) the certification regime; and (3) conduct rules that apply directly to a firm's workforce.

Are you an approved person with the FCA?

An 'approved person' is an individual who we approve to do one or more activities - what we call 'controlled functions' (senior management functions are a sub-set of controlled functions) - for an authorised firm.

Are building societies covered by the conduct rules?

From 7 March 2017, the FCA has extended the conduct rules to almost all employees working in banks, building societies and PRA investment firms (in-scope firms).

Why did the FCA create the conduct rules?

The FCA identified the implementation of the Conduct Rules as an area that the banking sector did not carry out particularly well, and therefore this has been given particular focus in the extension of SMCR to all solo-regulated firms.

How long does the FCA keep data on conduct rule breaches?

Significant breaches may need to be reported to the FCA. It is recommended that significant breaches are kept for six years in line with the auditor report requirements.

Is a receptionist for an insurance company subject to the conduct rules?

The definition of Conduct Rule staff covers anyone who is not a senior manager or a certified function holder and who does not fall under the FCA's list of Ancillary Staff. This list includes, for example, receptionists, property facilities management, events management, security, cleaners and catering staff.

Who is responsible for conduct risk?

It's the firm responsibility to understand what conduct risk means in their context and ensure all employees, management and board in addition to all entities are aware of the definition.

How many conduct rules are there in total?

The first thing to bear in mind is that there are two tiers of Conduct Rules: Individual Conduct Rules, which are general rules that apply to most employees and Senior Manager Conduct Rules, which apply only to Senior Managers. There are five Individual Conduct Rules and four Senior Manager Conduct Rules.

Who do senior manager conduct rules apply to?

They apply to all employees who perform financial services activities in a firm. The new rules are a fundamental part of the Senior Managers & Certification Regime, which aims to reduce harm to consumers by making individuals more accountable for their conduct and competence.

How often should staff be trained on the conduct rules?

All other staff, but excluding ancillary staff, are required to receive training on the conduct rules within one year of commencement, that is by December 2020. Again, annual refresher training is required.

What does SMCR mean for Senior Managers?

The Senior Managers & Certification Regime (SMCR) is part of the core effort led by UK regulators. So, what is SMCR and what does it mean in the context of your business? The aim is to drive personal accountability in financial firms, by promoting improved corporate culture, governance, and transparency.

What is conduct risk?

Conduct risk is broadly defined as any action of a financial institution or individual that leads to customer detriment, or has an adverse effect on market stability or effective competition.

Where a staff member who is not a senior manager is found to have breached the code of conduct this must be reported to the regulator within a period of?

The report is called REP008 and it should be completed and submitted using RegData. Firms need to report whether they have taken disciplinary action against individuals who are not Senior Managers for breaches of the Conduct Rules and, if so, the details of the breach.

What are the 4 powers the FCA have to use on non compliant firms?

issuing fines against firms breaching competition laws. making a public announcement when we begin disciplinary action and publishing details of warning, decision and final notices. applying to the courts for injunctions, restitution orders, winding-up and other insolvency orders.

What are the 5 codes of conduct?

What are the five codes of ethics?

• Integrity.
• Objectivity.
• Professional competence.
• Confidentiality.
• Professional behavior.

What are the 4 principles in the code of conduct?

ensure any advice that we provide is objective, independent, apolitical and impartial; ensure our decision making is ethical; engage with the community in a manner that is consultative, respectful and fair; and; meet our obligations to report suspected wrongdoing, including conduct not consistent with this code.

How do you enforce code of conduct?

Implementing a code of ethics involves creating procedures for investigating allegations and imposing sanctions on those who violate the code. Write policies that clearly and thoroughly explain ethics and a worker's obligations.