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The Financial Conduct Authority (FCA) has confirmed that it will introduce new and clearer rules to address serious non-financial misconduct within financial services firms, with the changes due to come into force on 1 September 2026. The move follows consultation feedback and growing regulatory focus on workplace culture, conduct and accountability across the sector.
What is non-financial misconduct?
Non-financial misconduct includes bullying, harassment and violence, which have increasingly been recognised as regulatory issues rather than purely employment ones, giving rise to disciplinary issues. Are you fit to work in a regulated environment if you are engaging in these forms of misconduct?
Didn't the FCA already update the rules on this before now?
Yes. Earlier changes to the FCA's rules in July 2025 sought to address these issues, but regulated firms made clear that additional guidance was needed to help them apply the new standards with confidence and consistency. In response, the FCA has now set out a more detailed framework designed to support firms while reinforcing expectations.
What is the intention behind the new rules?
The stated intention, according to the FCA, is to set clearer standards for how firms should identify, assess and address serious non-financial misconduct. These standards will bring greater alignment between the regimes that apply to banks and other organisations. They will also seek to reduce regulatory fragmentation across the financial services industry. The FCA has stated that its aim is to give firms greater confidence to act decisively where serious misconduct arises, while also driving consistency in regulatory outcomes.
And how does this interact with employment laws?
The FCA says there will be clearer alignment with employment law, recognising the need for firms to balance regulatory obligations with fair and lawful employment processes.
But is there a danger of overreach?
Indeed, yes, but the FCA has sought to address concerns about overreach. The guidance makes clear that firms are not expected to investigate trivial, malicious or implausible allegations, nor to act in ways that would breach privacy or data protection laws. This clarification is likely to be welcomed by firms that have struggled to balance cultural expectations with legal risk. A measured approach is required.
Minimum standards and fitness to practice
The guidance covers how firms should apply FCA rules on minimum standards of behaviour and how non-financial misconduct may impact an individual's fitness and propriety. This reinforces the message that conduct outside purely financial decision-making can still be highly relevant to regulatory assessments. The deterrent effect of this remains to be seen, but hopefully it will have some impact.
Let's hope that the FCA's stated aim to "drive higher and clearer standards across the industry bears fruit. For our clients, this means increased scrutiny around workplace conduct. Early strategic regulatory advice will be critical in order to manage investigations, protect individuals and their regulatory standing and reduce the risk of adverse FCA outcomes.
We routinely act for FCA-regulated individuals whose registration may be at risk. Of increasing importance and topicality is the impact of mental health and neurodiversity on the ability to practice. This is where our expertise in disability discrimination around mental health comes into play.
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