Conduct Risk Policy Template

Embed Consumer Duty. Manage Conduct Risk. Deliver Good Outcomes.

🎁 INCLUDES THE POPULAR "CONDUCT RISK STRESS TEST CHECKLIST"

32 Control Points to Assess Your Firm's Conduct Risk Framework

Complete alignment with Consumer Duty (PRIN 2A) | SYSC | ICOBS/COBS/MCOB/BCOBS | FG21/1 Vulnerable Customers | FG22/5 | SMCR

Conduct risk isn't a compliance afterthought—it's the foundation of sustainable financial services. The FCA's Consumer Duty has fundamentally raised the bar, requiring firms to proactively deliver good outcomes across every customer touchpoint. This comprehensive policy template gives you the complete framework to identify, assess, manage, and monitor conduct risks throughout the entire product lifecycle.

"The risk that the Firm's culture, organisation, behaviours and actions result in poor customer outcomes and customer detriment, or that fail to deliver good outcomes for retail customers as required by the Consumer Duty."

— FCA Definition of Conduct Risk

Why Conduct Risk Management Is Non-Negotiable

Inadequate conduct risk management exposes your firm to serious consequences:

• Regulatory Enforcement: The FCA has made clear that conduct failures—particularly under Consumer Duty—will attract significant supervisory attention and potential enforcement action
• Customer Detriment: Direct financial loss, indirect costs, and non-financial harm (stress, anxiety, inability to access services) all constitute poor outcomes
• Culture Failures: The FCA expects firms to embed good outcomes in leadership, strategy, governance, and people policies at all levels (PRIN 2A.8.1R)
• Distribution Chain Liability: PRIN 2A.10 extends accountability across the entire distribution chain—manufacturers and distributors alike
• SMF Accountability: Senior Managers face personal liability for conduct failures within their areas of responsibility
• Reputational Damage: FOS upholds, complaints data, and poor outcomes erode customer trust and market standing

Complete Product Lifecycle Coverage

This policy addresses conduct risk at every stage of the customer journey:

PRE-SALE

Product design, target market, fair value assessment

SALE

Distribution, marketing, communications, advice

POST-SALE

Product reviews, support, complaints, remediation

Consumer Duty Outcomes Embedded Throughout

Products & Services (PRIN 2A.3)

Design to meet target market needs; perform as expected

Price & Value (PRIN 2A.4)

Fair value assessment; reasonable pricing relative to benefits

Consumer Understanding (PRIN 2A.5)

Clear communications enabling effective decisions

Consumer Support (PRIN 2A.6)

Support throughout product life; no unreasonable barriers

Your Complete Conduct Risk Framework

A comprehensive, professionally drafted policy covering every aspect of conduct risk management—from culture and governance through to outcomes monitoring and Board assessment.

What Makes This Template Essential

Full Consumer Duty Integration

PRIN 2A requirements woven throughout, including cross-cutting rules, four outcomes, and annual Board assessment obligations.

Culture & Leadership Framework

Guidance on embedding good outcomes in strategy, governance, and people policies per PRIN 2A.8.

Product Governance

Complete framework for design, fair value assessment, and post-launch reviews aligned with PROD requirements.

Vulnerable Customers

FG21/1 compliant section covering identification, management, and outcomes monitoring for vulnerable customers.

KRIs & KPIs Framework

Pre-defined indicators including complaints, cancellations, FOS rates, and customer feedback metrics.

Distribution Chain Compliance

PRIN 2A.10 requirements for managing conduct risk across manufacturers and distributors.

🔥 BONUS: Conduct Risk Stress Test Checklist

32 embedded control points to assess your firm's conduct risk framework

Cultural indicators assessment

Business model risk drivers

Incentive structure reviews

Consumer Duty Board assessment

Third-party contract controls

Product governance process

Fair value assessment sign-off

Product risk tool completion

Distribution policy controls

Introducer agreement reviews

Financial promotion approvals

Customer documentation review

Post-implementation reviews

Fee change notifications

Vulnerable customer policy

Vulnerability training records

Complaints root cause analysis

Risk register maintenance

Conduct risk appetite setting

Business continuity testing

Staff competency framework

Outcomes monitoring programme

Each control point includes responsible party assignment and clear accountability

Complete Template Contents

• Introduction, Scope & Regulatory Context – Purpose, regulatory framework, conduct risk definition, Consumer Duty outcomes
• Risk Identification & Assessment – Forward-looking identification, KRIs/KPIs framework, pre-emptive mitigation
• Culture, Strategy & Business Model – Leadership requirements, Consumer Duty Champion, reward and remuneration controls
• Product Governance – Design requirements, fair value assessment framework, product risk tools
• Pre-Sale Activities – Product design elements, target market identification, inherent risk assessment
• Sales Activities & Distribution – Distribution policy framework, distribution chain responsibilities (PRIN 2A.10)
• Marketing & Communications – Financial promotions, Consumer Understanding requirements
• Post-Sale Activities – Product reviews, Consumer Support, costs and charges controls
• Vulnerable Customers – FG21/1 aligned definition, identification drivers, required measures
• Complaints Handling – DISP compliance, root cause analysis, proactive remediation
• Outcomes Monitoring – PRIN 2A.9 monitoring requirements, annual Board assessment (PRIN 2A.8.4R)
• Systems, Resilience & Staffing – SYSC 15A operational resilience, training and competency
• Governance, Roles & Responsibilities – Board, Consumer Duty Champion, Compliance, Risk Owners, all staff

Built-In Accountability Framework

Unlike generic policies, this template includes:

32 Control Points with assigned responsible parties

Each control point creates a clear audit trail for demonstrating to the FCA that your conduct risk framework is actively managed, monitored, and embedded across the organisation.

Comprehensive Regulatory Alignment

This template has been drafted with reference to:

• Financial Services and Markets Act 2000
• Financial Services Act 2012 & 2021
• FCA Principles for Businesses (PRIN)
• PRIN 2A – Consumer Duty
• SYSC 3.2, 7.1, 8.1, 15A
• PROD – Product Governance
• DISP – Complaints Handling
• FG21/1 – Vulnerable Customers
• FG22/5 – Consumer Duty Guidance
• PS22/9 – Consumer Duty Policy Statement
• SM&CR Requirements
• Equality Act 2010
• ICOBS / COBS / MCOB / BCOBS

"The consequences of failing to manage conduct risks are serious. Firms could lose client confidence, face regulatory censure, or enforcement action."

Who Is This Template For?

This Conduct Risk Policy Template is essential for:

• Insurance Intermediaries – ICOBS-regulated firms managing distribution conduct risks
• Investment Firms – COBS-regulated businesses with complex product governance requirements
• Mortgage Brokers – MCOB-regulated firms demonstrating fair treatment throughout the advice process
• Consumer Credit Firms – Embedding conduct risk in lending and collections practices
• Payment Services Providers – Managing customer outcomes across payment journeys
• Claims Management Companies – Meeting heightened FCA conduct expectations
• Product Manufacturers – Meeting PROD and distribution chain obligations
• Principal Firms with ARs – Extending conduct frameworks across appointed representatives
• Any FCA-Authorised Firm – Required to demonstrate Consumer Duty compliance

Download Your Conduct Risk Framework Today

Embed Consumer Duty. Demonstrate robust conduct risk management. Protect your customers and your firm.

Complete policy + 32 control points + regulatory appendices—ready for immediate implementation.

DOWNLOAD NOW

Instant download • Microsoft Word format • Fully editable

Developed by Compliance Consultant – Making Compliance Work

Over 20 years' experience supporting FCA-regulated firms across the UK

Chartered Fellow of the Chartered Institute for Securities & Investment (Chartered FCSI)

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