Conduct rules training: how to deliver something that actually changes behaviour

Why Most Conduct Rules Training Fails

The FCA requires firms to train all Conduct Rules staff on the Individual Conduct Rules and to keep records evidencing that training has been delivered. Most firms meet this requirement. Very few meet it in a way that produces any change in the behaviour of the people being trained.

The gap between completing a training programme and actually applying conduct standards is the central problem with conduct rules training in UK financial services. Firms invest in content, delivery and documentation — and then find that the FCA’s supervisory dialogue, their own complaints data, or their internal investigations still surface conduct failures that the training programme should have addressed.

This is not primarily a content problem. Most conduct rules training covers the right material. It is a design and delivery problem. Training designed to produce evidence of completion produces evidence of completion. Training designed to change behaviour requires a different approach entirely.

This post sets out what behaviour-changing conduct rules training looks like in practice — how to design it, how to deliver it, and how to know whether it is working.

Understanding What the Conduct Rules Actually Require

Before designing training, it is worth being precise about what the Conduct Rules require. The five Individual Conduct Rules under COCON are:

1. Rule 1: You must act with integrity
2. Rule 2: You must act with due skill, care and diligence
3. Rule 3: You must be open and cooperative with the FCA, the PRA and other regulators
4. Rule 4: You must pay due regard to the interests of customers and treat them fairly
5. Rule 5: You must observe proper standards of market conduct

Senior Managers are additionally subject to four Senior Manager Conduct Rules:

1. SC1: You must take reasonable steps to ensure that the business of the firm for which you are responsible is controlled effectively
2. SC2: You must take reasonable steps to ensure that the business of the firm for which you are responsible complies with the relevant requirements and standards of the regulatory system
3. SC3: You must take reasonable steps to ensure that any delegation of your responsibilities is to an appropriate person and that you oversee the discharge of the delegated responsibility effectively
4. SC4: You must disclose appropriately any information of which the FCA or PRA would reasonably expect notice

These are principles, not rules with mechanical application. Their meaning in practice depends on context — the type of business, the role of the individual, the specific situation. A training programme that teaches the rules as abstract propositions without grounding them in the firm’s actual business and the specific situations staff encounter will not produce behavioural change, because it never connects to the decisions staff actually face.

The Design Principles That Actually Work

1. Ground every rule in real situations from your firm’s business

The most effective conduct rules training works from scenarios drawn from the firm’s own business — product types, customer interactions, market activities, internal governance situations. A wealth management firm’s conduct training should feature scenarios from wealth management. An insurer’s training should feature scenarios from insurance distribution and claims. Generic financial services scenarios are a step better than abstract propositions, but they are still significantly less effective than firm-specific ones.

The FCA has been explicit that it expects firms’ training to reflect the specific risks and situations arising from their business model. Supervisory visits frequently test whether staff can apply conduct rules to scenarios from their actual work — not whether they can recite the rules in the abstract.

2. Use the Dual Newspaper Test as a practical framework

The Dual Newspaper Test — would this decision appear in a newspaper as wrong or harmful, and would a failure to act appear in a newspaper as overly cautious? — is a practical decision-making framework that staff can apply in real time without needing to consciously recall conduct rules. Embedding this or an equivalent heuristic into training gives staff a portable decision tool rather than a set of abstract standards.

3. Design for discussion, not delivery

Training sessions structured around discussion of scenarios — where participants are asked to identify the conduct issue, explain their reasoning, and defend their view — produce significantly better retention and behavioural change than sessions where content is delivered and then assessed with a comprehension quiz. The discussion format also surfaces misunderstandings that a quiz would not reveal: a participant can pass a quiz by selecting the right answer without understanding why it is right.

For most firms, the most effective delivery format for conduct rules training is a facilitated small-group discussion of real scenarios, run by a line manager or senior practitioner rather than a compliance officer reading from a slide deck. The line manager credibility effect is significant — staff who hear conduct standards applied to real business decisions by someone they respect are more likely to internalise those standards than staff who receive the same content from a centrally produced e-learning module.

4. Differentiate training by role and seniority

The same conduct rules apply to all staff within scope, but the way they apply differs materially by role. A conduct rules training session that covers the same content for a junior client services employee and a senior trader is likely to be too abstract for the junior employee and insufficiently challenging for the senior trader. Firms that stratify their training by role — delivering role-specific scenarios and discussion questions for each tier — typically produce better outcomes than firms that run a single programme across the whole population.

For Senior Managers subject to the additional Senior Manager Conduct Rules, the training must specifically address SC1-SC4 and their application to the individual’s specific accountability map. A Senior Manager who cannot explain how SC1 applies to their specific area of responsibility has not received effective training regardless of what the records show.

5. Treat training as ongoing, not annual

The FCA’s requirement to train Conduct Rules staff is sometimes interpreted as an annual training obligation. Technically it is not — there is no prescribed frequency beyond the initial requirement to train before staff perform in-scope roles. But from a behaviour change perspective, annual training has significant limitations: skills and awareness decay between sessions, new situations arise that were not covered, and the FCA’s supervisory expectations evolve.

Firms that supplement their structured annual training with regular touchpoints — team briefings on conduct issues, discussion of emerging FCA themes, case studies drawn from regulatory enforcement — maintain conduct awareness more effectively than firms that treat the annual session as the complete programme. These touchpoints do not need to be long or formally recorded — a ten-minute team briefing on a relevant FCA enforcement action is often more effective than an additional e-learning module.

What Effective Training Records Look Like

The FCA expects firms to be able to evidence that conduct rules training has been delivered. What that evidence looks like matters as well as whether it exists. Training records that show only completion dates and pass/fail scores on a comprehension assessment provide limited evidence of substantive training. Records that show the content covered, the scenarios used, attendance, and — where discussion formats are used — notes of key discussion points provide stronger evidence of a meaningful training programme.

For Senior Managers in particular, training records should show that the training addressed their specific Senior Manager Conduct Rules obligations and their specific accountability area. A generic training record for an SMF16 holder that shows they completed the firm’s standard conduct rules module is less defensible than a record showing they received training on SC1-SC4 as applied to their compliance oversight function.

Connecting Training to Culture

Conduct rules training is most effective when it is part of a broader conduct culture — where the standards taught in training are visibly applied by leadership, where conduct concerns can be raised without fear, and where the firm’s incentive structures do not systematically reward conduct that the training says is wrong.

The FCA has been clear across multiple supervisory communications that training programmes that exist in tension with the firm’s actual culture and incentive structures will not produce good conduct outcomes. A firm that trains staff on treating customers fairly while operating performance metrics that incentivise the opposite is not training effectively — it is creating cognitive dissonance. The FCA expects firms to align their conduct frameworks across training, culture, incentives and governance rather than treating them as separate programmes.

Under Consumer Duty, this alignment requirement has sharpened further. See our Consumer Duty Pillar Guide for how conduct obligations interact with the Consumer Duty outcomes framework.

The FCA’s Supervisory Expectations on Training

The FCA has published several pieces of guidance relevant to conduct rules training, most notably in the context of the SMCR framework and in thematic reviews on culture and conduct. Key supervisory expectations include:

• Training must precede the role. Staff must receive conduct rules training before they begin performing in-scope activities — not at the next available training cycle
• Training content must be appropriate to the role. Generic training that does not address the specific conduct risks of a role does not fully meet the obligation
• Records must be maintained. The firm must be able to demonstrate who was trained, when, and on what content
• Training must be updated when conduct rules change. The Phase 1 SMCR reforms and any future changes require training programmes to be reviewed and updated accordingly — see our post on SMCR Reform 2026
• Training alone is not sufficient. The FCA expects firms to embed conduct rules through culture and governance — training is a necessary but not sufficient component

The Resourcing Question

Effective conduct rules training requires someone capable of designing role-specific scenarios, facilitating substantive discussions, and connecting conduct standards to the firm’s actual business. In many regulated firms, this capability sits — or should sit — with the SMF16 (Compliance Oversight) holder or their team. Where the compliance function lacks the capacity or expertise to run effective training, firms sometimes bring in external facilitators or use structured materials from regulatory training providers.

The resourcing of conduct training is a direct reflection of the firm’s commitment to substantive conduct governance. A compliance function that is adequately staffed to run effective training is better positioned to deliver good regulatory outcomes than one that relies entirely on centrally produced e-learning modules to meet the training obligation.

For SMF16 appointments — including fractional and interim arrangements — see our SMF16 Compliance Oversight Function Guide and our SMCR compliance recruitment service.

Related Reading

Further reading on conduct and SMCR: FCA Conduct Rules Guide | Individual Conduct Rules | Senior Manager Conduct Rules | Conduct Rules Breach Reporting | SMCR Guide | SMF16 Compliance Oversight Guide | Certification Regime Guide | SMCR for Limited Scope Firms | Interview Questions for Senior Managers | Consumer Duty Guide | FCA Regulated Firm Recruitment

Adrian Lawrence

Adrian Lawrence FCA is the founder of FD Capital and a Fellow of the Institute of Chartered Accountants in England and Wales (ICAEW). He holds a BSc from Queen Mary College, University of London, and has over 25 years of experience as a Chartered Accountant and finance leader working with private, PE-backed and owner-managed businesses across the UK. He founded FD Capital to connect growing businesses with the Finance Directors and CFOs they need to scale — and personally interviews candidates for senior finance appointments.