The Financial Conduct Authority (FCA) has issued a much-anticipated clarification of its rules and expectations around non-financial misconduct (NFM) and has committed to broadening the scope of current rules to apply to a further 37,000 regulated firms by September 1, 2026, as part of an ongoing drive to ensure firms instil the right ‘tone from the top’.
Regulatory red flags
In a statement released on July 2, 2025, the FCA outlined that it will extend NFM rules that currently apply to banks to “around 37,000 other regulated firms” in a bid to increase consistency of regulation across the financial services sector. Under these rules, “serious bullying and harassment” will qualify as misconduct, clarifying a previous gray area around what types of behaviors amounted to a conduct rules breach at non-bank firms.
From September 1, 2026, “serious, substantiated cases of poor personal behavior” will also need to be shared through regulatory references in the same way that financial misconduct currently is. This will make it harder for individuals found to have committed NFM breaches to avoid potential consequences by simply moving from firm to firm.
Sarah Pritchard, FCA deputy chief executive, said:
“Too often when we see problems in the market, there are cultural failings in firms. Behavior like bullying or harassment going unchallenged is one of the reddest flags – a culture where this occurs can raise questions about a firm’s decision making and risk management.”
The strong link between NFM and other types of misconduct is a repeating theme in messaging from current and former FCA staff, and there is often a strong correlation between behaviors like harassment or abusive language and other issues like market abuse.
Pritchard also echoed previous comments from FCA Co-Executive Director of Enforcement and Market Oversight, Therese Chambers around firms being seen to ‘do the right thing’:
“Our new rules will help drive consistency across industry and support the vast majority of firms that want to do the right thing to deepen trust in financial services.”
Getting on top of tone from the top
The importance of firms setting the right ‘tone from the top’ is by now a well-worn cliché, having been part of the FCA’s messaging for over a decade. In that decade, we have seen the conversation around NFM become louder, and the expectations – both from the regulator and from the wider public – around conduct and culture have steadily increased.
Within the last year alone, the FCA has published findings of a survey into rates of NFM at financial services firms between 2021 and 2023. The results made for stark reading, with the number of incidences of NFM increasing significantly year-on-year. This survey, and the regulator’s subsequent activity around NFM, can be seen as a direct response to the Treasury Committee’s ‘Sexism in the City’ report and the U.K. government’s subsequent expectation that the FCA address harassment and bullying within the financial space.
More recently, the FCA issued a £1.8 million ($2.3 million) fine against Crispin Odey for a “lack of integrity,” also banning him from the industry, as a result of repeated incidents of sexual assault and misconduct from 2003 to 2021. The FCA’s draft NFM guidance covers how firms “should consider non-financial misconduct when assessing whether an individual is fit and proper to work in financial services,” indicating that misconduct like bullying and harassment must be factored in alongside current Fitness and Propriety testing when establishing if someone is fit for a senior role within a firm.
Interestingly, the FCA also highlights that firms “should consider use of social media and the relevance of behavior in private and personal life.”
This potentially opens the scope of where firms need to be monitoring for behavior that may constitute NFM to include social media channels, where it may manifest as direct messages, voice notes, or comments depending on platform.
Combined with the FCA’s previous suggestion that firms “consider a variety of complementary methods for identifying non-financial misconduct to improve detection and for considering information that comes from different sources,” it is becoming clear that organizations need to ensure they are leveraging tools to monitor for signs of non-financial misconduct in the same way they monitor for financial misconduct.
Conduct consultation
The FCA has initiated a consultation (CP25/18: Tackling non-financial misconduct in financial services) that closes on September 10, 2025, in order to source industry feedback on the rules and establish whether “further guidance would be helpful and proportionate for firms as they implement the rule change.”
While the regulator has said it will only proceed with the guidance if “there is clear support for it,” it is hard to imagine there would be considerable industry pushback against it, unlike previously contentious FCA proposals.
The rule is contextualized around the regulator’s primary objectives of consumer protection and supporting well-functioning markets, and its secondary objective of supporting economic growth. While rule changes might seem at odds with the FCA’s previous commitment to taking a more “hands off” approach to regulation, it continues the agency’s trend of engaging consultatively with the industry, and is a widening of existing rules rather than creation of new regulation.
By providing clarification around when NFM becomes a regulatory breach, making rules more consistent across the entire financial sector, and giving firms a sturdier framework to act on instances of NFM, the FCA is sending a clear message. The regulator is taking conduct, culture, and non-financial misconduct seriously – and it expects firms to do the same.
With the FCA’s rules around non-financial misconduct expanding to apply to even more firms, ensuring that you have the right tools in place to monitor and detect the tell tale signs of NFM is a business imperative. The right surveillance solutions can help your teams flag and escalate warning signs of misconduct – so you can act on them before it becomes a regulatory matter.
