Summary Webinars Flashcards
Unit 3 - The Company Perspective of Misconduct
> Poor attitudes to reg reqmts
> Poor relationships with regulators
> E.g. Manipulation scandles (e.g. Libor and Forex)
> Working in silos - different interpretations of ‘good’. Not consistent company-wide
> Conduct risk mgrs/champions as positive influencers
Unit 3 - The Customer Perspective of Misconduct
> Regulation viewed as an obstacle for employees to achieve objectives
> Poor outcomes for customers. Leads to loss of trust
> Compliance with letter, but not spirit of regulation
> Poor disclosure
> Lack of transparency - reliance on small print
> Lack of customer centricity - do not benefit from loyalty
> Failing to recognise customer needs
> Failure to understand customer needs - offer best advice/solution. Everyone individual - challenge to show appropriate outcome for cust needs. Consider persistency - how long customers stay.
Unit 3 - The Market Perspective of Misconduct
> Poor market integrity
- Soundness, stability and resilience
- Transparency of processes, like price-setting
- Orderly operation of markets (over dominance of small number of firms?)
- Reduction in the risk of financial crimes
> Less investment and liquidity in the market - reducing growth opportunities
> Ineffective competition - who suffers the consequences?
> Poor customer retention
> Poor reputation - of the sector
> Lack of trust - by both consumers and regulators
> Regulatory artitrage - take advantage of weaker regulations in other countries
> Difficult regulator relationships - greater scrutiny and cost
Unit 3 - Non-Financial Misconduct
> Regulatory focus - wider behaviours of individuals e.g.
- Bullying
- Harassment
- Discrimination
- Lack of diversity and inclusion
- Criminal behaviour
> Challenge agreeing what is meant is practice
> Risks
- Legal action/reg intervention
- Financial consequences
- Stakeholder responses - may withdraw support
- Failure to achieve strategic objectives
- Reporting and dissemination
- Consequences for individuals
> Solutions… identify cultural drivers and address via them
- Leadership
- Management (consistency)
- Speaking up
- Incentives (balanced scorecard)
- Code of conduct and ethics (cover all interactions with any stakeholder)
- Governance (ID all risks and ID solutions to address)
Unit 4 - What are 5 key elements for considering conduct risks?
> Culture and ethics - in the firm / industry
- Values / Remuneration / Individuals’ fitness and propriety / Training and competence / Regulatory relationships / Board interdependence
> Customer focus - sales / after-sales (employee-based)
- Suitability / Clear and fair terms of business / Product design / Complaint handling / After sales processes / Fin Crime protection / CDD / AML systems & ctrls
> Leadership - governance
- By example / Allocation of responsibility / Accountability vs responsibility / Training and knowledge / Advice and guidance
> Control - mechanisms (systems) & information
- Reporting lines and escalation / Permissions / consumer protection / Lines of communication / Monitoring and reporting
> Risk - identification & mitigation of
- Exchange rates / Market abuse and manipulation / Insider dealing / Risk management processes / Risk appetite / Risk monitoring
Unit 4 - What does SM&CR mean from a conduct perspective?
> Senior Mgrs Regime - Senior Management Functions - SMFs (carry accountability to regulators)
> Certification Regime - Material risk takers
> Conduct rules - all emplyees
> Responsiblities maps (organograms)
> Main driver - credit crisis and lack of senior management accountability
Unit 4 - What do the EU GL11 Guidelines in Internal Governance cover from a conduct perspective?
> Risk culture - does firm have constant and cohesive culture?
> Corporate Values and Codes of Conduct
> Conflicts of Interest
- Actual and potential
- Firm-wide
- Employee-related
Unit 4 - What do the Markets in Financial Instruments Directives (MiFID) cover from a conduct perspective?
> Conflicts of interest
> Remuneration to encourage responsible conduct
> Communications - clear, fair and not misleading
> Advice
> Product intervention (by regulators)
> Governance processes / sales processes
> Suitability (of advice / products)
> Safeguarding client assets
Unit 4 - What does the EU Insurance Distribution Directive (IDD) cover from a conduct perspective?
> Design and distribution of insurance products
> Product oversight and governance
- Development & approvals
- Target markets / distribution channels
- Monitor and review (incl of gov & oversight)
> Information needs and suitability
- Assessment of info
- Information issued
- Record keeping
Unit 4 - What are common complaints handling considerations / requirements?
> Complaint definitions - to avoid confusion
> Timeliness of acknowledgments
> Timeliness of response
> Next steps / how to apply any remedies
> Referral for independent reviews
> Record keeping and regulatory reporting
Unit 4 - What do the EU General Data Protection Regulations (GDPR) cover from a conduct perspective?
> Data protection as a conduct issue
> Main issues to consider:
- Consent for data recording / retention
- Notifying breaches to regulators
- Data subjects’ rights of access / to be forgotten
- Designing in privacy
- DPOs and their roles
Unit 4 - What needs to be considered for Vulnerable Customers?
> Complex and variable definitions
> Conduct approaches:
- Correct ID of a vulnerability
- Relationship management
- Human interventions
- Employee training
> Policies and procedures, strategies, disclosures and conmmunications
Unit 1 - What is conduct?
> A set of rules on how to behave
> How a firm is managed
> How a person behaves in certain situations
Unit 1 - What is misconduct?
> Immroral and ethical behaviours
> Managing business badly (e.g. financially, or how interacts with Clients / consumers)
> Acting wrongly
> Consequences… (poor treatment of consumers, lack of financial control, poor business management)
Unit 1 - What are the OECD High Level principles on Financial Consumer Protection 2011?
> Avoid or manage conflicts
Safeguard the best interest of consumers
Treat consumers fairly
Communicate with them
Train employees properly (incl products, regulations, the rights consumers have)
Give proper advice to consumers
Reward and remuneration packages
