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7 March 2017: Are you prepared for the SMCR Conduct Rules deadline?

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Summary: The SMCR Conduct Rules come into force on 7 March 2017 for all “Conduct Rules Staff” in banks (i.e. staff who are neither SMF holders, nor certification staff, nor performing purely administrative functions). If you haven’t yet briefed your Conduct Rules Staff about this, you must act fast to ensure that you meet your statutory duties, and that your staff are not exposed to unnecessary personal regulatory risk.

On 7 March 2017, the extension of the individual Conduct Rules in the FCA Handbook and the PRA Rulebook comes into force.  This is arguably the most important change brought about by the SMCR, as it introduces personal regulatory duties for almost all employees of banks (only those who perform purely administrative duties will escape). On 7 March 2017,  thousands of people will become personally accountable to the regulator for the very first time.

But the change doesn’t only affect individuals – banks (including UK branches of overseas banks) themselves have a statutory duty under section 64B of FSMA 2000 (expanded upon by guidance in the FCA Handbook at COCON 2.3)  to:

  • Notify all their staff who are subject to the Conduct Rules that the rules apply to them; and
  • Take all reasonable steps to ensure that affected staff understand how the rules apply to them, which includes:
  • Providing suitable training – the relevant FCA guidance states that “suitable training should always ensure that those who are subject to the rules have an awareness and a broad understanding of all of the rules, and that they also have a deeper understanding of the practical application of the specific rules which are relevant to their work”.

Many firms are relying on web-based training to fulfil their s64B statutory duty. In our experience, there is a limit to how engaged people will be with web-based training modules.  Given the significant impact that the new Conduct Rules will have on banking employees’ personal regulatory exposure, we advocate  running face to face, small group briefing sessions, tailored to the relevant firm and group of employees. Such sessions should include realistic scenarios that individuals may face in their day-to-day role and offer people the chance to ask questions, to ensure that they understand the practical implications of their duties properly. This process isn’t only about ticking a regulatory box; more importantly, it’s about equipping people with the information that they need to understand and manage their personal regulatory risks in the new world of increased personal accountability.

Feel free to contact us if your staff have any last minute training needs before the 7 March go-live date for the Conduct Rules Staff dimension of SMCR. We’d also be delighted to hear from you if you would like to discuss any SMCR-related issues more generally.

Finally, for forward-looking regulatory advice you need this year,  Download your copy of our annual financial regulation report – a collection of 20+ practical articles on key topics including competition, financial crime, data protection and much more.

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