Conduct Rules — tier 2 (Senior Manager)

Category: Compliance & AML · Reviewed by Jake Leat, Associate Director · Last reviewed June 2026

The four additional Conduct Rules that apply to Senior Managers and that govern the discharge of senior management responsibilities — reasonable steps, regulatory engagement, delegation and disclosure.

Definition

The tier 2 Conduct Rules apply only to individuals holding a Senior Management Function. They set personal standards specifically for the senior management role: taking reasonable steps to control and manage the business, complying with regulatory requirements, ensuring proper delegation, and disclosing appropriately to regulators.

Legal / Regulatory basis

FSMA section 64A and COCON 2.2. The Duty of Responsibility under FSMA section 66A(5) (formerly section 66B) operates alongside.

How it works in practice

The four tier 2 rules are: (SC1) You must take reasonable steps to ensure that the business of the firm for which you are responsible is controlled effectively. (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. (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. (SC4) You must disclose appropriately any information of which the FCA or PRA would reasonably expect notice.

Common variations

The tier 2 rules apply alongside tier 1, so a Senior Manager is subject to nine (or ten, including the Consumer Duty rule) Conduct Rules in total. The “reasonable steps” standard provides the framework against which the Duty of Responsibility under FSMA section 66A(5) is tested in enforcement.

Example

A breach of SC2 might be alleged where a senior manager with responsibility for compliance fails to ensure that the firm’s PII renewal is completed before expiry. The FCA would test whether the senior manager took reasonable steps — board reporting, calendar management, escalation processes, contingency planning — not whether the lapse itself occurred.

See also

• Conduct Rules — tier 1 (Individual)
• Duty of Responsibility
• Senior Management Functions (SMF)
• Statement of responsibilities

References

FCA Handbook, COCON 2.2. Financial Services and Markets Act 2000, sections 64A, 66A. FCA Policy Statement PS18/14.

Last reviewed

By Matt Bartlett, Director, on 2026-06-11.

This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-11. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.