CFA UK Code Standards and Regulations and their respective roles in ensuring good conduct

Wednesday 26 February 2020

Codes, standards and regulations

Author: Andy Burton

Codes, standards and regulations respectively each have a role to play in steering best practice and conduct in the financial servicesprofession. Indeed, they serve complementary functions in achieving this important goal.


With the roll-out this year of the Senior Manager’s & Certification Regime (SMCR) from the banking sector into asset management, leaders are now held more clearly accountable for the good conduct of the staff within their organisations.

A new report Codes, Standards & regulations created by a CFA UK volunteer working group led by Sam Betha, CFA, asks the question of how codes and standards play an important role in ensuring good conduct within the financial services industry. 
The report explores how well-drafted codes and standards can complement regulation and provide the necessary guidance for finance professionals to navigate the ‘grey areas’ that can arise in the activities of stewarding other people’s money over the long-term.

Senior Managers can use codes and standards in their organisations to supplement the ‘minimum bar’ of regulation and drive a customer-focused culture, which aspires to deliver (and be seen to be trying to provide) client objectives first. Now the FCA is beginning to officially recognise industry codes to bring some necessary teeth to what in the past, may have been dead-and-dusty documents left forgotten on shelves and at the bottom of office drawers.

Market developments

Standards should evolve alongside market developments.  Market practitioners need to be fully involved in their periodic review.  Senior Managers should look to find creative ways to raise employee awareness of applicable standards, engage and involve them in their evolution and in so doing promote a successful conduct culture and effective controls in their firms. 

Codes, in their nature are more static and enduring than standards, nevertheless they also need to be kept alive in the work-force’s consciousness.  Apart from controls for adherence, a rigorous process to handle breaches (alleged and real) and the dissemination of lessons learned (internally and across the industry) are important processes in preventing future malpractice.

Shaping good conduct

CFA UK surveyed its members on their level of understanding of codes, standards and regulations.  Over half of the respondents had over 21 years of industry experience.  A majority agreed that codes and standards had an important role to play in shaping good conduct. They also agreed that leaders and practitioners need to be involved in their drafting - yet, most respondents had never been involved in drawing up standards or codes.  The survey also uncovered a degree of confusion about the respective definitions of a code and a standard. 

The working group concluded that senior managers need to make yet wider use of codes and standards as effective and necessary tools in helping them to build the right culture in their firms and to support them in their responsibilities under SMCR.

* Andy Burton is a Professionalism Advisor at CFA UK

Codes, Standards & Regulations



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