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Getting Conduct Training Right

Getting conduct training right is an industry-wide goal. To this end, the Conduct Training Principles, published last year by the FICC Markets Standards Board (FMSB), provide a useful best practice benchmark, applicable well beyond the scope of the wholesale fixed income, commodity and currency markets. The FMSB Principles are built around the four pillars of an effective conduct training framework.

Here we discuss recent developments and trends in relation to each of these pillars.

Getting the Ownership Right

In this era of accountability, there's increasing recognition that the ownership of conduct training is shared between several stakeholders. Although there is no one-size-fits-all blueprint, stakeholders are likely to include Business, Compliance and HR. The FMSB proposes that roles and decision-making responsibilities should be clearly allocated and documented, with provision made for appropriate investment and resourcing, and the ongoing assessment of both coverage and effectiveness.

You might also like: 'Firms Need a Strong Culture for Good Conduct, Says the FCA'

Getting the Content Right

Accountability is also perhaps the driver for a more systematic approach to module content—a greater recognition that an effective conduct training framework starts with a clear and documented linkage between a firm’s conduct risk assessment (referencing the firm’s business model, geographic presence, products, client base etc.) and the firm’s conduct training program.

Although, in broad terms, all conduct training focuses on integrity, treating customers fairly and observing proper standards of market conduct, the scope is potentially extremely broad, ranging from high-level ethical standards to detailed and prescriptive laws and regulations. In fact, it is hard to draw the line where ‘conduct’ starts and ends.

Helpfully, the FMSB Principles contain an outline syllabus for firms to tailor, although this is just a starting point. The breadth of the conduct agenda has resulted in conduct being increasingly embedded in less obvious training topics, such as governance and leadership. In response to this widening of the conduct agenda, there is a growing drive towards creative, role-based, individually-tailored training solutions built around a risk-based syllabus that addresses each stage of the employee lifecycle (from junior new starters through to those being promoted into management roles).

By its nature, conduct-based training tends to be built around a combination of hypothetical and real-life scenarios. Although traditional compliance training approaches rely on one-dimensional right/wrong responses, there is increasing acknowledgment that the subjectivity of conduct issues calls for a more nuanced approach.

Exploring the ‘gray areas’ empowers employees to exercise and develop their ‘conduct-muscle’ by making conduct-based decisions in the safety of the training environment. This change in approach has in turn fuelled a trend towards the creation of decision-making frameworks used to guide employee conduct choices (inside and outside the training) and to promote consistent conduct responses across the firm.

This trend is further underpinned by an increased focus on escalation protocols that support employees in uncertain, difficult or potentially serious conduct situations.

Getting the Delivery Right

Typically, conduct training is delivered through a combination of online and face-to-face modules. Both have their place and a blended, complementary approach is perhaps the most effective from a learner, outcome and cost perspective.

Creative online training can effectively present learners with the type of role-based scenarios discussed above while ensuring that a risk-based conduct syllabus is efficiently targeted. An exciting emerging development here is the use of gaming technology to deepen learners’ exploration of scenarios by enabling them to explore, choose and experience different options in a more engaging and dynamic way.

In the classroom, the move towards business-led, face-to-face training opens up the opportunity for discussion and exploration even further. Here, however, it must be acknowledged that the quality of the outcome is highly dependent on the delivery. Coaching and support for those delivering the training will maximize quality, consistency and effectiveness.

More from the blog: 'Conduct Rules: Understanding Your Responsibilities'

Getting the Assessment Right

Assessing and recording the effectiveness of conduct training has its challenges, too. Whereas traditional compliance training assessments have focused almost purely on knowledge, conduct training assessments must also encompass both understanding and behavioral change. A new approach is perhaps called for, which goes beyond reliance on the end of the course test.

One trend in this area is towards adaptive courses. Here, the assessment is positioned at the start of the module and is used to identify the learner’s training needs. This approach both reduces the training burden for the learner and maximizes the effectiveness of the training by targeting it more accurately.

Another development involves a much broader approach to conduct assessments altogether, beyond reliance on the ‘snapshot’ indicator provided by a test. Emerging best practice seeks to link a range of conduct metrics, including conduct breaches, disciplinary events and employee surveys, to both the content of conduct training programs and to annual fitness and propriety assessments at an individual, team and firm level.

You might also like: 'Measuring Compliance Training: A Behavior Change Focused Approach'

LEO GRC has an extensive suite of Personal Conduct and Market Conduct eLearning courses, including our Conduct Rules for Asset Managers course. To find out more and access free trials, click here.

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