Emma RadmoreFCA has published a consultation paper setting out its approach to supervising and enforcing the SMCR, and a wider discussion on extending Principle 5 (standards of market conduct) to the unregulated activities of authorised firms.
The consultation paper explains how FCA expects firms and their senior management to consider market codes when they are determining what is the “proper standard” of market conduct as part of their SMCR requirements. It plans to recognise codes for this purpose where it feels they set out helpful standards for a particular market or activity.
The wider discussion aims to encourage firms to follow appropriate standards even where they are not binding. FCA is also keen to enhance its powers to take action against misconduct, and hopes to address the problems caused in the past by recent serious market misconduct that was outside the regulatory perimeter. However, it does not want to give codes full regulatory status, nor does it intend to change its regulatory approach to codes that cover regulated markets and activities or its current “confirmation” approach to industry guidance generally (this is guidance on particular rules, and therefore distinguishable from industry codes on behaviour).
The paper seeks views on the proposals, including on the process for recognising codes, and the impact of an extension of principle 5. FCA asks for views by 5 February 2018.
