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Conduct Risk Policy
This Policy should be read in conjunction with the firm's Treating Customers Fairly (TCF) Policy.
- 1.1 Conduct risk is viewed by the Financial Conduct Authority (FCA) as the risk that a firm's behaviours may result in poor outcomes for the customer. Firms are, therefore, required to identify and mitigate risks relating to conduct in accordance with the size, complexity and geographic reach of their businesses.
- 1.2 Conduct risk sits within the firm's risk management framework. This sets out regulatory compliance standards and the behaviours expected of both management and staff.
- 1.3 The requirement to demonstrate good conduct applies to all customer types, regardless of the product or service supplied.
- 2.1 The firm is committed to going about its business ethically and in line with generally accepted good business practice in the insurance sector.
- 2.2 The firm places the interests of its customers at the heart of its business activities, including strategic decision-making, choice of products and services supplied, product design processes, policies and procedures, the training and supervision of its staff and working practices.
- 3.1 The firm requires conduct risk to be a key consideration in the strategic direction set by the business, including but not limited to growth objectives, budgets, marketing plans, product distribution plans, the skills and competencies required of its staff and the recruitment of Appointed Representatives.
- 3.2 The firm therefore expects the achievement of good conduct outcomes to be central to the thinking of its senior management team in relation to strategic planning.
4. Roles and Responsibilities
- 4.1 The firm's corporate structure and apportionment of responsibilities at governing level are documented and regularly reviewed.
- 4.2 Job descriptions are maintained for staff and periodically updated to help ensure conduct objectives are clear and that there is an agreed point of reference for individual roles and responsibilities.
- 5.1 The firm supports and seeks to reinforce a culture in which good conduct is central to the business.
- 5.2 The firm also supports a culture of transparency and encourages its staff to escalate conduct issues or raise concerns without fear of reprimand.
- 5.3 The firm's senior management is committed to keeping abreast of emerging conduct risks, including issues highlighted by the FCA and other regulators, and to taking steps to address these as and when they are identified.
6. Identification and Escalation
- 6.1 The firm's systems and controls are subject to ongoing review, with the aim of ensuring that any working practices or other business activities which might undermine good conduct are addressed.
- 6.2 Where any new, emerging or previously undiscovered conduct risks are identified, senior management is required to investigate their root causes and take remedial action. If the risk cannot be avoided or eliminated, suitable mitigation strategies will be adopted.
- 6.3 The firm will maintain records to demonstrate how each area of concern has been addressed and whether the risk elimination or control measures it has introduced have been effective.
- 6.4 The firm aims to ensure that its members of staff have an understanding of what conduct risk is, and how this affects their individual roles and responsibilities.
- 6.5 Staff members are expected to report any concerns in relation to conduct, whether in their own or other areas of the business, to line management or through the firm's whistleblowing procedures.
7. Policies and Procedures
- 7.1 The firm maintains a suite of policies and procedures which is designed to help achieve good conduct standards throughout the business.
- 7.2 All staff members are expected to adhere to these policies and procedures and report any gaps, inconsistencies or issues which might prejudice the attainment of good conduct standards to line management.
8. Risk Register
- 8.1 The firm maintains a Risk Register in which conduct-related risks are identified. This is regularly reviewed and updated, to take account of changes within the business and the environment within which the business operates.
9. Product Development
- 9.1 Where the firm is involved with the development of new products and/or the significant modification of existing products, it will establish and maintain a Product Oversight and Governance Policy in accordance with FCA rules in Chapter 4 of the Product Intervention and Product Governance Sourcebook (PROD 4).
- 10.1 The firm maintains recruitment procedures which are designed to ensure that job applicants are suitable, of good character and 'fit and proper' to undertake the roles for which they will be employed.
- 10.2 Newly-appointed members of staff are required to undergo induction training, to help them gain an understanding of the firm's expectations in relation to conduct, the fair treatment of customers and, where applicable, the management of any conflicts which they may encounter in their day-to-day roles.
- 10.3 Managers are expected to appropriately supervise staff members until they are assessed as being competent. Performance of staff members is regularly appraised and individual action plans are designed to address any further training needs and issues that have been identified.
- 10.4 The firm will take appropriate action in respect of any members of staff who persistently fail to achieve or maintain good conduct standards.
- 10.5 The firm will ensure that all members of staff are adequately supervised on a day-to-day basis and that staffing levels are sufficient to meet service standards.
- 10.6 Where bonuses or additional forms of remuneration are offered to sales staff, these will be designed in a way which does not conflict with the achievement of good conduct standards or the Customer's Best Interests Rule (ICOBS 2.5.-1R). Additionally, the firm's remuneration system will be kept under review to ensure it does not drive poor behaviour or negatively impact customer outcomes.
11. Product Distributors and Third Party Administrators
- 11.1 The firm will only appoint product distributors and third party administrators (TPAs) following a due diligence process and in accordance with its Product Oversight and Governance Policy, which will include consideration of conduct risks posed by such parties.
- 11.2 Contracts issued to product distributors and TPAs will set out the scope of their duties and responsibilities including, where applicable, any service standards with which they are expected to comply.
- 11.3 The firm will remunerate product distributors and TPAs in a way which does not conflict with the Customer's Best Interests Rule (ICOBS 2.5.-1R) and keep such remuneration under review, to ensure that it does not drive poor behaviour or negatively impact customer outcomes.
- 11.4 A risk-based approach to the monitoring of product distributors and TPAs will be adopted, to ensure that the end-customer receives the service levels which the firm expects.
- 12.1 The firm is committed to ensuring that there are no barriers to customers raising concerns or making a complaint about the service they have received.
- 12.2 The firm is additionally committed to maintaining a robust and fair process for the handling of complaints.
- 12.3 The firm's process for reviewing complaints data includes the identification of risks relating to conduct and taking remedial action to address such risks whenever they are encountered.
13. Monitoring and Management Information
- 13.1 The firm is committed to ensuring that conduct-related issues are considered at board or executive committee level.
- 13.2 Management Information (MI) which includes indicators of conduct will be subject to regular review, to highlight issues or concerns which will need to be addressed by the business.
- 13.3 The firm will analyse MI in a number of different ways, including:
- 13.3.1 Over a period of time, to consider any trends or patterns
- 13.3.2 By product or service, according to the risk profile of the product or service
- 13.3.3 By individual, team or other grouping
- 13.4 The firm will challenge and verify unexpected results.
- 13.5 The firm may additionally seek feedback from customers through the use of customer surveys and/or mystery shopper exercises in order to build a picture of the product or service from the customers' perspective.
14. Breach Reporting
- 14.1 Any breaches of this Policy, or practices which are considered not to be compatible with it, should be brought to the attention of the firm's Compliance Officer.
15. Review of this Policy
- 15.1 This Policy will be reviewed annually or as otherwise stated in the firm's Compliance Monitoring Plan.