Unit 30 Legal Principles and Professional Ethics in Financial Services Assessment Brief 2026

Unit 30 Legal Principles and Professional Ethics in Financial Services Assessment Brief

Unit in brief

Learners will study the main legal principles that underpin the financial services sector. They will learn about the importance of making ethical choices at all stages of their financial services career.

Unit introduction

For any society to operate, it must have a system of rules and accepted behaviours in place and all society members need to understand that they must abide by them or be subjected to a penalty  or exclusion. The UK as a country has a legal framework in place and the financial services sector operates within it. For anyone who works in the financial services sector, it is vital that they have an understanding of this framework and of the rules as they apply to financial services.

In this unit, you will understand the need for strict regulation of organisations and individuals providing financial services products, and how this regulation is designed primarily to protect consumers. You will learn about the importance of working ethically – acting with honesty and integrity, even when that might not be the easiest route to choose.

You will develop sound knowledge of legal principles and professional ethics in this unit and it will help you to progress to the study of financial services at a higher level, for example professional qualifications and degree-related programmes. The unit will also help you to progress to employment in the financial services industry.

Learning Aims

In this unit you will:

A. Explore the laws regulating financial services in the UK

B. Examine business and professional ethics standards in financial services

C. Investigate the principles and application of ethical behaviour in providing financial services to customers.

Summary of unit

Learning aim A: Explore the laws regulating financial services in the UK

Teaching should include the main features of each of the specific statutes listed, sufficient to ensure that learners can understand their relevance and application to the financial services industry.

A1 High-level regulation
How law is formed in the UK, with a particular focus on those laws that have a direct effect on the delivery of financial services.

• Creation of UK law, including:
  o primary legislation with laws made by Parliament
  o secondary legislation with delegated powers, e.g. the Lord Chancellor making decisions on taxation.
• Acts of Parliament relating to financial services, to include:
  o Financial Services and Markets Act 2000
  o Financial Services Act 2021
  o Consumer Insurance (Disclosures and Representations) Act 2012.
• Role of the Bank of England as a regulator, to include:
  o The Financial Policy Committee (FPC)
  o provision of strategic direction for the entire regulatory regime.
• Role of the Prudential Regulation Authority (PRA), to include:
  o part of the Bank of England
  o responsibility for the stability of systemically important financial institutions, e.g. banks, building societies and insurers
  o primary objective to promote safety and soundness of PRA-authorised organisations
  o ensuring capital adequacy of firms, e.g. Solvency II for insurers, Basel III for banks.
• Role of the Financial Conduct Authority (FCA), to include:
  o independent regulator responsible for conduct of business and market issues for all financial services firms
  o majority of firms authorised by PRA are dual registered with the FCA
  o strategic objective to protect and enhance confidence in the UK financial services system
  o operational objectives of consumer protection in relation to finance, protecting integrity of the financial services system and promoting competition
  o codes of conduct sourcebooks, e.g. BCOBS, MCOBS, ICOBS
  o Treating Customers Fairly (TCF).

A2 Financial crime

Understanding of the types of financial crime that can be committed and the laws in place to prevent and punish this crime.

• Data protection, to include:
  o definition of personal and sensitive data
  o role of the Information Commissioner’s Office
  o General Data Protection Regulation (GDPR).
• Money laundering, including:
  o definition and offences from Proceeds of Crime Act 2002
  o three stages of money laundering – placement, layering and integration
  o Money Laundering Regulations 2017
  o client due diligence (CDD)
  o role of the National Crime Agency (NCA).
• Market abuse, including:
  o insider dealing, e.g. using knowledge not available to the public to make gains from shares
  o market manipulation, e.g. disseminating false or misleading information to manipulate the price of financial instruments, such as shares.
• Bribery:
  o offences under the Bribery Act 2010 – offering or giving a bribe, agreeing to or accepting a bribe, bribing a foreign public official, failure by a commercial organisation to prevent bribery being committed on its behalf.

A3 Other areas of financial protection
Consumer protection and human rights laws, applicable to all situations of daily living and therefore also to financial services.

• Equality Act legislation, including protected characteristics such as gender, disability, ethnicity, marital status.
• Financial Services Compensation Scheme (FSCS), to include:
  o protection in the event of a financial services provider becoming insolvent
  o up to £85,000 of deposits protected and £1 m short-term deposits protected
  o 100 per cent of compulsory insurance claims, e.g. 3rd party motor and employer liability
  o 90 per cent of non-compulsory insurance claims, e.g. travel and household insurance.
• Financial Ombudsman Service (FOS), to include:
  o independent body to consider complaints made against financial service providers
  o circumstances in which FOS would become a complaint, including client dissatisfaction after the financial service provider has given their final response to the client
  o maximum compensation that FOS can impose is £150,000 plus expenses and interest
  o decision of FOS is binding on the financial services provider but not on the consumer.
• Advertising Standards Authority (ASA), including requirements for all advertising to be legal, decent, honest and truthful.

Note: the legislation and compensation amounts detailed above are current at time of publication and are subject to change, please ensure that at delivery, current legislation and compensation amounts are covered.

Learning aim B: Examine business and professional ethics standards in financial services

Should include an understanding of how a business makes choices to be shareholder focused or stakeholder focused. The study of professional ethics should enable learners to apply the relevant codes of conduct to a number of scenarios.

B1 Business ethics

The ways in which financial services businesses decide on their own philosophy and code of ethics, whether focused purely on making a profit or more outward facing.

• Definition of ethics in business, including:
  • shareholder-focus approach
  • stakeholder-focus approach – employees, community, shareholders, consumer groups.

B2 Professional ethics

Understanding that professional ethics is about doing what is right in all circumstances and appreciating how this can, at times, differ from what the employer and/or the employer’s client wants them to do.

• Definition of professional ethics, including: o doing what is right, not just doing what the rules state have to be done o acting with honesty and integrity.
• Codes of conduct, to include: o FCA Code of Conduct o employer codes of conduct.
• Membership of professional bodies, including codes of ethics of relevant professional body or bodies for a job role, e.g. the Chartered Insurance Institute (CII) for insurance, the London Institute of Banking and Finance (LIBF) for banking.

Learning aim C: Investigate the principles and application of ethical behaviour in providing financial services to customers

C1 Business regulation and compliance

The application of regulatory laws and rules to the delivery of financial services to customers.

• Customer service standards, including:
  • standards set out by individual companies to meet customer requirements and manage expectations
  • standards relating to FCA rules, e.g. refund of premium within 30 days of cancellation, paying of claims promptly, responding fully to complaints within eight weeks.
• Service level agreement standards:
  • set between companies who are contracted to each other o set between different departments within a company.
• Role of the Compliance Officer and their team, to include:
  • liaison with regulators, e.g. the Prudential Regulation Authority (PRA) and the

Financial Conduct Authority (FCA) o disseminating regulatory changes across the company o ensuring that relevant compliance training is in place for all employees o carrying out audits of files and calls to ensure that work is carried out compliantly.

• Role of Money Laundering Reporting Officer (MLRO), to include:
  • ensuring all staff are aware of anti-money laundering procedures, including customer due diligence
  • carrying out an assessment of reported money laundering suspicions o reporting appropriate money laundering suspicions to the National Crime Agency (NCA).
• Complaints procedures, to include:
  • all expressions of dissatisfaction to be treated as a complaint – can be received verbally or in writing
  • maintenance of complaints log and reporting to FCA
  • responding to complaints within prescribed timescales – prompt acknowledgement and final response within eight weeks o carrying out root-cause analysis.

C2 Know Your Customer (KYC)

The process of fact finding and providing customers with advice and financial services  product recommendations.

• Initial disclosure process, including an explanation to the customer of the nature of the advice provided, e.g. independent, restricted.
• Fact-finding process, including establishing customer circumstances, needs and available budget.
• Recommendation process, including: o deciding on a suitable product o providing customer with key features document o providing customer suitability letter or statement of needs.

C3 Act with integrity 

An understanding of the types of situation where those working for financial services organisations are required to act with integrity, putting the interests of the customer first.

• Conflict of interest, including:
  • definition
  • possible scenarios, e.g. same insurer for claimants, selling of a product that will provide benefits to the employee in terms of bonus or similar, customer wanting to take out unsuitable product.
• Whistleblowing, to include: o informing on illegal/unethical practice by others in the company o protection provided by the Public Interest Disclosure Act (PIDA) 1998.

Assessment Criteria

Essential information for assignments

The recommended structure of assessment is shown in the unit summary along with suitable forms of evidence. Section 6 gives information on setting assignments and there is further information on our website.

There is a maximum number of three summative assignments for this unit. The relationship of the learning aims and criteria is:

Learning aim: A (A.P1, A.P2, A.M1, A.D1,)

Learning aim: B (B.P3, B.P4, B.M2, B.D2)

Learning aim: C (C.P5, C.P6, C.M3, C.D3)

Further information for teachers and assessors

Resource Requirements

For this unit, to understand their ethical philosophy and compliance procedures, learners must have access to information on a range of financial services companies, including banks, building societies, insurance companies and investment companies. Information can come from direct contact with the organisations or via their websites.

Essential Information for Assessment Decisions

Learning aim A

For distinction standard, learners will research and evaluate how laws are created in the UK and show a comprehensive knowledge of the structure of the financial services regulatory framework, understanding the role of the main regulators, and the interaction between regulators and the authorised firms that they supervise. They will demonstrate a strong understanding of legislation applicable to financial services and to all consumer circumstances, such as anti-discriminatory and advertising legislation. Learners will show a comprehensive knowledge of the types of financial crime, be able to give well-worked examples and provide justification as to their conclusions on whether or not the legislation and supervision in place is sufficiently robust to detect and deter financial crime. The presentation of their research must be written professionally and be well structured, using fully-correct legal and financial services terminology and produced to a high quality standard.

For merit standard, learners will research and assess how laws are created in the UK and show a good knowledge of the structure of the financial services regulatory framework, understanding the role of the main regulators, and the interaction between regulators and the authorised firms that they supervise. They will demonstrate a good understanding of legislation applicable to financial services and to all consumer circumstances, such as anti-discriminatory and advertising legislation. Learners will show a good knowledge of the types of financial crime, be able to give examples and provide some justification as to their conclusions on whether or not the legislation and supervision in place is sufficiently robust to detect and deter financial crime. The presentation of their research must be mostly professionally written and mostly well structured, using appropriate legal and financial services terminology and produced to a good quality standard.

For pass standard, learners will research how laws are created in the UK and will explain the structure of the financial services regulatory framework, having some understanding of the role of the main regulators and the authorised firms that they supervise. They will demonstrate some understanding of legislation applicable to financial services and to all consumer circumstances, such as anti-discriminatory and advertising legislation. Learners will show some knowledge of the types of financial crime and give some examples. The presentation of their research must be structured, using some correct legal and financial services terminology and be clear for the given audience.

Learning aim B

For distinction standard, learners will research and evaluate the ethical policies of a large financial services business, justifying how it decides on its own policies with reference to the different ethical stances it could choose to take. They will show a comprehensive understanding of professional bodies and their role in setting and monitoring the professional ethical standards of their members. This will include consideration of professional qualifications offered by the bodies being considered and their code of conduct. Their case study must be professionally written and well structured, using fully correct legal and financial services terminology, it will be produced to a high quality standard.

For merit standard, learners will research and analyse the ethical policies of a business, assessing how a business decides on its own policies. They will show a good understanding of professional bodies and their role in setting and monitoring the professional ethical standards of their members. The case study must be mostly professionally written and mostly well structured, using appropriate legal and financial services terminology and be produced to a good quality standard.

For pass standard, learners will research the ethical policies of a business, explaining how a business decides on its own policies. They will show some understanding of professional bodies and their role in setting and monitoring the professional ethical standards of their members. Their case study must be structured, using some correct legal and financial services terminology and must be clear for the given audience.

Learning aim C

For distinction standard, learners will research and comprehensively evaluate the, standards, procedures and roles that a financial service organisation must have in place to provide services to its customers, and which are compliant with regulations, including having an in-depth understanding of the rules of Know Your Customer (KYC). Learners will be able to identify a range of situations where a conflict of interest might arise and justify the measures which should be put in place to manage such events. The training pack must be professionally written and well structured, using fully correct legal and financial services terminology and be produced to a high quality.

For merit standard, learners will research and analyse the standards, procedures and roles that a financial service organisation must have in place to provide services to its customers and which are compliant with regulations, including having a good understanding of the rules of Know Your Customer (KYC). Learners will be able to identify a range of situations where a conflict of interest might arise and analyse the measures which should be put in place to manage such events. The training pack must be professionally written and well structured, using fully correct legal and financial services terminology and be produced to a high quality.

For pass standard, learners will research and explain the standards, procedures and roles that a financial service organisation must have in place to provide services to its customers that are compliant with regulations, including having some understanding of the rules of Know Your Customer (KYC). Learners will be able to demonstrate an awareness of the types of situation where a conflict of interest might arise. The training pack must be structured, using some correct legal and financial services terminology and must be clear for the given audience.

Links to other units

This unit links to:

• Unit 1: Exploring Business
• Unit 3: Personal and Business Finance
• Unit 7: Business Decision Making
• Unit 14: Investigating Customer Service
• Unit 23: The English Legal System
• Unit 26: Aspects of Criminal Law Impacting on Businesses and Individuals
• Unit 27: Work Experience in Business
• Unit 31: Effective Management of Personal Debt.

Employer Involvement

Centres can involve employers in the delivery of this unit if there are local opportunities to do so. There is no specific guidance related to this unit.

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