FS19/3: Recognition of codes: feedback on QCP 23 18/39

We summarise responses received to QCP 18/39 on the recognition of industry codes of conduct and outline our next steps.

The recognition process

To support and encourage the development and use of best practice industry codes of conduct, we created a process to formally recognise industry codes covering certain unregulated activities. Behaviour in line with an FCA recognised industry code is consistent with meeting the requirements of the Senior Managers and Certification Regime (SM&CR) to observe ‘proper standards of market conduct’ for unregulated activities. However, it may equally be possible to observe proper standards of market conduct in other ways.

How we consulted on the Codes

In December 2018, we published our December Quarterly Consultation No 23 CP18/39 seeking views on whether or not we should recognise the following industry codes of conduct:

Feedback summary and our response

We received 11 responses to the recognition of codes section in CP18/39. These responses were from firms, banks and trade bodies.

The responses all agreed that the FX Global Code and UK Money Markets Code met our recognition criteria and that we should recognise them. No respondents raised concerns with recognising the codes.

On the FX Global Code, one industry body said that it had no objections to recognition and agreed that the code clearly illustrated examples of good practice. Another industry body expressed its support for recognition and said that it considered the code to be a significant advancement over the Non-Investment Products code, and an important component of the Fair and Effective Markets Review.

On the UK Money Markets Code, one bank said recognition would promote industry support for code adoption, creating a fair, transparent and effective money market.

Separately, issues were raised regarding the concept and application of the overall recognition regime.  One respondent expressed concern that the recognition regime would create a two-tier system between recognised and voluntary codes. They also asked if code recognition would be given the equivalent regulatory status as FCA guidance. Another respondent asked for clarification of the territorial scope of the recognition regime. Lastly, a respondent asked about our approach to code updates. We set out our approach to these issues in our Policy Statement PS18/18 on the Code Recognition Regime: Industry Codes of Conduct and Feedback on FCA Principle 5.


We have recognised both Codes taking into consideration the consultation responses.

Next steps

The FX Global Code and UK Money Markets Code will be recognised for 3 years, which we can extend if appropriate and if we think these codes are still relevant. Our recognition of these codes is as they stand at the current date. If we think that the codes no longer represent proper standards of market conduct, we will withdraw recognition before the end of the 3-year period. Our SM&CR rules do not change because of the recognition of these codes. 

By conducting themselves in line with these codes’ provisions, where applicable, individuals and firms may be assured that this will tend to indicate compliance with their obligation to observe proper standards of market conduct.

We do not intend to supervise firms or individuals directly against these codes in unregulated markets. Our role is to make sure that firms meet their governance, and systems and control obligations, including under the SM&CR. We expect firms and individuals to consider both the spirit and letter of code provisions to make sure they fully meet ‘proper standards of market conduct’. Compliance with codes may be one way to show evidence they are compliant with our overall governance requirements.

We will not take action based solely on a breach of provisions in market codes (recognised or not). Codes may be used as evidence and relied upon in determining what proper standards are, or were believed to be, at the relevant time. Recognition of a market code does not change our enforcement approach.

It is not a new basis for enforcement, and does not enhance our ability to take enforcement action.