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Conduct Rules for Senior Managers at Dual Regulated Firms

Under the Senior Managers Regime, all senior managers must comply with the FCA's six Individual Conduct Rules (ICRs) and four Senior Managers Rules (SMRs).

Senior Managers are expected to comply with all 10 Conduct Rules and take 'reasonable steps' to prevent breaches.

Our SMCR Conduct Rules Course helps your Senior Managers to learn about the rules, their contraventions and their application in practical situations.

Start your trial Course details
  • 60 Minutes
  • For managers
  • Based on UK legislation, but suitable for global audiences upon the removal of UK-specific references and translation as necessary.

Learning objectives

  • Recall the Financial Conduct Authority (FCA) Conduct Rules that apply to you as a Senior Manager
  • State to whom the FCA Conduct Rules apply
  • Explain how the FCA Conduct Rules apply in practice
  • Describe how you will comply with the Conduct Rules in your role
  • Describe when the FCA might take action for non-compliance with the Conduct Rules

    What can you expect your employees to learn?

Introduction

What are the Conduct Rules for Senior Managers?

  • What are the Conduct Rules?

Individual Conduct Rule 1: Integrity

  • Examples of breaches
  • You decide: Is it a breach?
  • Individual Conduct Rule 1: Key takeaways

Individual Conduct Rule 2: Due skill, care & diligence

  • Examples of breaches
  • You decide: Is it a breach?
  • Individual Conduct Rule 2: Key takeaways
 

Individual Conduct Rule 3: Cooperation with regulators

  • Examples of breaches
  • You decide: Is it a breach?
  • Individual Conduct Rule 3: Key takeaways
 

Individual Conduct Rule 4: Customers' interests

  • Examples of breaches
  • You decide: Is it a breach?
  • Individual Conduct Rule 4: Key takeaways
 

Individual Conduct Rule 5: Market conduct

  • Examples of breaches
  • You decide: Is it a breach?
  • Individual Conduct Rule 5: Key takeaways
 

Individual Conduct Rule 6: Consumer Duty

  • Examples of breaches
  • You decide: Is it a breach?
  • Individual Conduct Rule 6: Key takeaways
 

Additional rules for Senior Managers

Senior Manager Conduct Rule 1: Effective control

  • Examples of breaches
  • You decide: Is it a breach?
  • Senior Manager Conduct Rule 1: Key takeaways
 

Senior Manager Conduct Rule 2: Compliance with regulatory requirements

  • Examples of breaches
  • You decide: Is it a breach?
  • Senior Manager Conduct Rule 2: Key takeaways

Senior Manager Conduct Rule 3: Effective delegation

  • Examples of breaches
  • You decide: Is it a breach?
  • Senior Manager Conduct Rule 3: Key takeaways
 

Senior Manager Conduct Rule 4: Disclosures to regulators

  • Examples of breaches
  • You decide: Is it a breach?
    Senior Manager Conduct Rule 1: Key takeaways
 

Breach notification

Serious consequences

  • In the news: Regulatory repercussions

Summary

Assessment

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Your questions, answered

Financial Crime

How can I log and track incidents of financial crime in my organisation?

Our Compliance Breach Register allows you to securely log and monitor incidents of financial crime, such as bribery or money laundering. The tool enables you to track resolution progress and maintain a clear audit trail, ensuring accountability and compliance with regulatory requirements.

How can I ensure my employees understand and comply with our internal policies in relation to financial crime?

Our Policy Hub enables you to distribute policies such as your Anti-Money Laundering (AML) policy to employees, track acknowledgements, and send automated reminders. This ensures everyone understands their obligations and helps you maintain compliance with financial crime regulations.
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Can small businesses be held accountable under competition law?

Yes. Competition law applies to businesses of all sizes. Even small companies can face investigations and serious penalties for engaging in anti-competitive conduct.

Are informal conversations with competitors risky?

Absolutely. Informal chats, especially those involving prices, market plans, or customers, can constitute unlawful agreements and should be avoided.

What are the consequences of breaking competition law?

Violations can lead to heavy fines for companies, director disqualification, criminal prosecution, and reputational damage.

How can companies prevent anti-competitive behaviour?

By implementing regular compliance training, setting clear internal policies, encouraging reporting of concerns, and ensuring employees understand the legal risks.

Does the Criminal Finances Act 2017 apply to non-UK companies?

Yes. The Act can apply to overseas entities if any part of the tax evasion facilitation occurs within the UK or involves UK tax liabilities. Multinational firms with UK operations should take note.

What industries are most at risk under the Criminal Finances Act?

Industries with complex financial transactions, high-value assets, or extensive third-party relationships such as banking, legal services, real estate, and professional consulting are particularly exposed to conduct and facilitation risks.

How often should businesses review their tax evasion prevention procedures?

Best practice is to conduct reviews annually or whenever there are significant changes in business operations, regulatory guidance, or risk exposure. Regular audits help ensure ongoing compliance.

Can small businesses be prosecuted under the Criminal Finances Act 2017?

Yes. The Act applies to all organisations, regardless of size. However, the HMRC’s guiding principles allow for proportionality, meaning smaller firms are expected to implement controls that match their risk level and operational complexity.

What industries are most vulnerable to proliferation financing risks?

Industries dealing with dual-use goods, advanced technologies, chemicals, and logistics are particularly exposed. Financial institutions supporting international trade also face elevated risks.

How can small businesses ensure compliance with proliferation financing regulations?

Even SMEs should implement basic risk assessments, maintain up-to-date sanctions screening tools, and train staff on red flags related to trade-based money laundering and dual-use items.

Are there international standards for combating proliferation financing?

Yes. The Financial Action Task Force (FATF) provides global guidelines, including Recommendation 7, which focuses on targeted financial sanctions related to proliferation.

What are “dual-use goods” and why are they significant?

Dual-use goods are items that can serve both civilian and military purposes. Their trade is tightly regulated due to the potential for misuse in weapons development.

How often should proliferation financing risk assessments be updated?

Best practice suggests reviewing risk assessments annually or whenever there are significant changes in business operations, customer profiles, or geopolitical developments.

What is an anti-money laundering check?

As per Experian, AML checks “help prevent money laundering by confirming potential customers and businesses are who they say they are, and assessing how likely it is they’re involved in financial crime. For entities regulated by the Financial Conduct Authority (FCA), this due diligence is considered essential and is a legal requirement”.

What is anti-money laundering compliance?

Following AML laws, regulations and procedures to detect and stop suspicious and illicit money flows, including fraud and terrorist financing.

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