Ethics, conduct and treating customers fairly
What this domain tests
Values and behaviours rather than rules alone: how the FCA Principles, Consumer Duty and the treating customers fairly outcomes are applied and evidenced in a platform business.
Principles and Consumer Duty
- The FCA Principles for Businesses include integrity, skill care and diligence, management and control, customers' interests, communications, conflicts of interest, and relations with regulators.
- Consumer Duty requires good faith, avoidance of foreseeable harm, and enabling and supporting customers to pursue their objectives, measured through four outcomes.
- The six treating customers fair outcomes run from confidence in fair treatment through products designed for needs, clear information, suitable advice, products that perform, and no unreasonable post-sale barriers.
Conflicts, remuneration and culture
- Inducements must not impair acting in the client's best interests; they are prohibited for independent advice.
- Gifts and hospitality registers and personal account dealing rules must be enforced, not merely written.
- Remuneration must not reward volume in a way that creates mis-selling incentives.
- SM&CR conduct rules apply to all staff; the certification regime covers material risk takers; SYSC 18 requires whistleblowing arrangements and notification to the FCA.
Vulnerability and complaints
- Vulnerability must be identified and responded to across the whole customer journey.
- Complaints must be handled fairly and promptly, with the eight-week final response and clear signposting to the Financial Ombudsman Service.
Worked example
A platform pays its transfer team a bonus linked to the volume of DB pension transfers completed. Compliance flags that this rewards volume over suitability. The remedy is to remove the volume link, monitor conversion and take-up rates by adviser, and refresh training. Reason: remuneration that rewards volume conflicts with the client's best interests and risks breaching the Principles and the Consumer Duty good faith rule.
Traps that cost marks
- Reciting the TCF outcomes without linking them to evidence a firm could actually show a supervisor.
- Assuming a client's agreement is a defence when the underlying recommendation was unsuitable.
- Treating complaints handling as transactional rather than a conduct outcome.
- Overlooking that vulnerability obligations apply at every stage, including in arrears and at withdrawal.