FCA Conduct of Business Rules - A Practitioners Guide to COBS

• The course director has worked with the Conduct of Business rules FCA (COBS) for over 20 years and has seen how the rules have changed and how firms have successfully adapted to them.
• Your course director is experienced as both a regulator and in training regulatory requirements across wholesale and retail financial firms. He will pass on past experiences to enhance the workshop and help bring it to life.
• We focus on the practical interpretation of the rules and industry responses. We look to ask and answer the question – “So what?”
• We have served clients of all shapes and sizes in the financial sector and are fully aware of the obligations of a regulated firm and what is expected from them by the regulator.
• We do not use academics. All our trainers are highly experienced professionals with relevant vocational experience in the real world
• Our case studies enhance the learning points and are often found to be essential in truly understanding the requirements and growing the skills to apply them
• We are always judged by our results which speak for themselves and the feedback received from previous delegates has always been excellent.

• To be able to outline the key requirements of COBs and the transposition of MiFID provisions
• To able to outline the relevant touchpoints of COBS with the end-to-end client journey, beginning with product design
• To recognise the linkage between COBS and other key rulebooks, to support holistic compliance advisory and monitoring activity
• To recognise good practice / avoid poor practices
• To recognise how the regulatory principles and mindset permeate the COBs rules
• To understand a firm’s obligations to its clients

Session 1: COBs – where does it sit in our world

• The Conduct Authority, Conduct Risk and the Conduct of Business rules
• The rationale behind its position in the rulebook hierarchy
• Links to Principles for Business (PRIN)
• Links to individual Conduct Rules (COCON)
• Links to the FCA 5 Conduct Risk Question Framework
• Applicability
• High-level overview
• Fines and prohibitions for COBS breaches
• Latest FCA regulatory round-up
• Case studies – WH Ireland Ltd., Standard Life Assurance Ltd., Lanyon Astor Buller (LAB)

Session 2: Conduct of Business Obligations (COBS 2, COBS 12)

• The FCA rules and regulations – key requirements
• Honest, fair and professional
• Examples of good and poor practice as identified by FCA
• Information disclosure before providing services
• Inducements – MNMBs (minor non-monetary benefits)
• Gifts and Hospitality controls
• Research – definitions and who pays?
• Discussion – what policies, procedures and controls have participants seen established to control risks? How have they worked in practice?  How have weaknesses been addressed?

Session 3: FCA Client Categorisation and Communication (COBS 3, COBS 4, COBS 5)

• Retail, Professional and Eligible Counterparty
• General notifications
• Appropriate levels of protection
• Policies, procedures and records
• Fair, clear and not misleading promotions
• What constitutes a promotion
• FCA Occasional Paper 26 - April 2017
• FG15/4: Social media and effective communication with customers
• Identification and approval – process and records
• Direct Offer and Cold calls
• Restrictions
• Distance Communications
• Exercise – 1) Categorisation of Clients and 2) Assess three financial promotions for approval
• Exercise – Identifying COBS (and other) issues from an overheard office conversation

Session 4: Information about the firm; Insurance Distribution and Client Agreements (COBS 6, COBS 7, COBS 8)

• Information about the firm
• Charging and Remuneration
• Product Providers and Platform services
• Descriptions and Disclosure of information
• Additional Insurance distribution obligations
• Client contracts (Agreements)

Session 5: Suitability & Appropriateness (COBS 9, COBS 10)

• Suitability vs. Appropriateness

• Financial situation
• Objectives of investment
• Risk elements (Attitude / Capacity / Knowledge & Experience)

• Assessing suitability
• Insistent clients – FCA position
• FCA Suitability reports

•  FCA requirements vs. commercial consideration

• Appropriateness – assessment, obligations, client warnings, guidance and applicability
• Exercise – Understanding how we assess suitability
• Case Study – Carphone Warehouse fine

Session 6: Dealing and Managing; Preparing and Providing Product Information; Cancellation (COBS 11, COBS 13, COBS 14, COBS 15)

• Best Execution
• Quality of Execution, Client Order Handling, Limit Orders
• Personal Account Dealing Policy

• FCA accreditation expectations of firms
• Typical firm expectations of staff

• Holistic control frameworks – recording and reporting
• Recording telephone & electronic communications

• Monitoring; Reporting; Retrieval

• Key features documents and illustrations
• Content and provision to clients
• Cancellation – rights, communication, exercising and effects of cancellation
• Case studies: Mark Lyttleton (Huduno)

Session 7: Round up – Light-touch on other areas of COBs

• Claim handling process: Long-term care
• Specialist Regimes
• Pensions supplementary positions
• With profits
• Permitted Links
• Restrictions on the distribution of certain complex investment products

Wrap-up

• Summary
• Questions
• Open forum

With over 20 years of training experience in financial services, the trainer is well placed to support you across a range of compliance-related topics.  He is a former Head of Education for HSBC covering the UK and Europe, responsible for regulatory and financial crime-related compliance learning.  His time at HSBC was during intense scrutiny from regulators and government functions during the bank’s Deferred Prosecution Agreement.

Other roles include leading the Monitoring and Testing programme for a UK Wealth Manager, and Senior Vice President responsible for Global Risk & Compliance training at a US-based bank.  He also worked in the Insurance Firms division at the Financial Conduct Authority (in the FSA days) where he was the divisional expert for the rules and outcomes required under the Training & Competence handbook.

The HSBC role, along with five years at Barclays in their Private Clients and Wealth functions, has seen him work with retail, commercial, wholesale and private banking channels.  Since leaving HSBC, he has worked with the compliance, HR and operational teams of firms to enhance their regulatory understanding, as well as delivering content across private equity firms, investment houses, banks and wealth managers.  He regularly delivers core programmes for TISA and the Investment Association.

The FCA conduct of business rules course trainer is a former member of the Investment Management Association Training & Education Committee and won the Thomson Reuters award for “Most Effective Compliance Training at a Regulated Firm” in 2010.

COBS is fundamental to everyday compliance, conduct risk management and culture and leadership programme in firms.  Too often we become focused on the same rules and requirements and don’t keep ourselves appraised of the breadth of the COBS requirements.  The majority of COBS-related training is on Financial Promotions.  This course looks to wrap into a single day, a practical and jargon-busting overview of all the most commonly experienced and most commonly misunderstood requirements from the FCA COBS summary rulebook.

COBS is such a broad rulebook, covering the activities of trying to attract clients, onboard clients, provide advice to clients and meet clients’ ongoing needs.  It is the user manual for a business that wants to conduct its business compliantly and cement an understanding of ‘what we do’ and ‘why we do it’ in staff who can carry this message into and throughout their own firms.  As well as putting the client at the heart of our thinking and decision-making, we consider the client's impact on how we act with other corporates in terms of managing conflicts of interest, with a specific focus on financial inducement.

Who should Attend?  

The session, split across two half-day webinars, is designed for those working in UK-regulated firms and subject to the FCA rules.  The FCA conduct of business rules course straddles the Introductory and Intermediate levels.  Candidates without any regulatory or practical experience may struggle.  As such it is well suited to the Compliance professional who has already attended an Introduction to UK regulation event and is now deepening their knowledge, or to the more experienced professional who hasn’t needed to stay up to date on wider COBS issues.  Other roles (such as Risk or Audit) are welcomed and will benefit when they have a current basic knowledge of COBs regulation and a desire to better understand the rule requirements at a detailed level.