Since the financial crisis regulation has moved towards greater scrutiny of firms’ conduct. Conduct regulation has become a hot topic but does anyone really understand what activities it will encompass? There is no definition in any legislation, policy or commentary as to what is meant by ‘conduct regulation’. In most markets conduct regulation means at least consumer protection, market conduct rules and some minimal ethical codes of conduct. However, in more developed regulatory markets such as that in the UK conduct regulation also extends to corporate governance and incentives, organisational systems, competition and anti-trust, ‘fit and proper’ requirements and professionalism and, more recently also to what is known as ‘product governance’.
Conduct regulation means different things depending on the context and the type of business being regulated. The following note focuses only on the regulation of conduct in the insurance sector but draws on resources which consider conduct in the wider financial services’ context. To read further Beyond law: understanding the scope of conduct regulation, March 2015