Conduct Rules Breaches Reporting to begin on 2 November 2020

On 13 August 2020, the FCA published a new webpage on “Conduct Rules reporting for solo-regulated firms”.

The Conduct Rules require all firms to notify the FCA if disciplinary action is taken against any member of staff who is not a Senior Manager for breach of the Conduct Rules.  Whilst “ancillary staff” are exempt, the rules are otherwise very wide and apply to employees, volunteers, contractors, temporary staff and secondees.

The report must be made annually on form REP008 (even if the firm is making a nil return) and should be submitted using Gabriel.  The report should include all disciplinary action (defined as a formal written warning, suspension, dismissal or clawback of remuneration), even if it is subject to an appeal.

Form REP008 should be submitted within 2 months of the end of the firm’s “reporting period”, being:

  1. In the case of Limited Permission Consumer Credit firms: their accounting reference date; and
  2. For all other solo-regulated firms: 31 October of each year (2 November in 2020 due to 31 October 2020 being a Saturday).

The Conduct Rules were introduced for Senior Managers, Certification Staff and non-SM&CR directors from 9 December 2019.  However, due to Coronavirus, the Conduct Rules will only apply to other staff members from 31 March 2021.  As such, a firm’s first REP008 submission on 2 November 2020 should only cover Certification Staff and non-SMCR directors of firms. Whilst an inconsequential £250 fine is levied on all late returns, you don’t want to become known to the FCA as a firm which misses regulatory reporting deadlines.  REP008 (also known as “Form H”) really isn’t that difficult to complete.  However, it does require firms to aggregate a reasonable amount of information about staff and assumes an understanding of the Conduct Rules, how they apply in practice, and the existence of a robust procedure for assessing breaches.  As such, organisation and timely preparation remain the key components of SM&CR compliance in this area.

If you’re looking for a way to more easily manage your compliance duties under SM&CR, why not see how Corterum can help?