Note: This article was published in June 2015 and there have been changes to the proposals since then. The last tier under the proposed new approved persons regime is the conduct rules.
The new conduct rules are far wider reaching than the existing statement of principles. The PRA rules cover all those under the certification or senior manager function (SMF) regimes. The FCA definition, however, is even wider. It covers, “all employees except ancillary staff who perform a role not specific to the financial services function of the business”. What this means is that the vast majority of your staff will be covered by the FCA definition.
If you are covered by either the PRA or FCA definitions above then you must comply with the following 5 rules:
- You must act with integrity.
- You must act with due skill, care and diligence.
- You must be open and co-operative with the FCA, the PRA and other regulators.
- You must pay due regard to the interest of customers and treat them fairly.
- You must observe proper standards of market conduct.
The above rules are relatively straight forward and you would expect staff to be already complying with these requirements. In addition to these rules Senior Managers must also comply with a further 4 rules:
- You must take reasonable steps to ensure that the business of the firm for which you are responsible is controlled effectively.
- You must take reasonable steps to ensure that the business of the firm for which you are responsible complies with relevant requirements and standards of the regulatory system.
- 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.
- You must disclose as appropriate, any information of which the FCA or PRA would reasonably expect notice.
Credit Unions will be required to carry out training to make individuals aware of the new rules and how they apply to them and their role. There are also requirements regarding reporting breaches or suspected breaches to the regulator and where they have taken formal disciplinary action against a person for any reason specified by the regulator. Credit Unions will also need to consider the HR implications of the new rules.