In brief
- The FCA's non-financial misconduct rules came into force on 1 September 2026 and now apply to all regulated firms.
- Non-financial misconduct is no longer just an HR matter. Serious cases of bullying, harassment, sexual misconduct and violence are now regulatory compliance issues, carrying direct personal consequences for staff.
- Firms that have not already updated their disciplinary policies, investigation frameworks, fitness and propriety assessments and regulatory reference processes should treat this as an immediate priority.
What has changed?
The FCA's new rules and guidance on non-financial misconduct (that is, behaviour that is not of a clearly financial nature, such as bullying, harassment and violence) came into force on 1 September 2026. The new rules extends the FCA's conduct rules to non-bank firms, such as asset management firms, brokers and insurers, requiring them to address serious non-financial misconduct with the same rigour as financial wrongdoing. Serious cases of bullying, harassment, sexual misconduct and violence in the workplace now explicitly constitute breaches of the FCA's code of conduct across all regulated firms.
What the FCA non-financial conduct rules now require
Firms are now expected to treat non-financial misconduct as a regulatory compliance issue, not solely an internal HR matter. The rules capture conduct that is 'serious'; an as yet untested scale but we expect that seriousness will be influenced by the behaviours impact on the subject, the seniority of the person whose conduct is in question, and whether it forms part of a repeated pattern of poor behaviour.
The rules catch misconduct with a sufficient work-related link, which could include misconduct towards a colleague on the firm's premises, while working remotely on the firm's business, or at a work event organised by the firm or another organisation.
All staff subject to the FCA code of conduct, including senior managers, certified persons and conduct rules staff, should now treat a finding of serious non-financial misconduct as a breach of the code of conduct. For senior managers and certified persons, such a finding may also affect the assessment of their fitness and propriety, potentially jeopardising their ability to hold a regulated role, and will now be disclosed on regulatory references in the same way as financial misconduct.
Managers now carry direct accountability
With the rules now live, managers must take reasonable steps to protect staff from non-financial misconduct and to respond appropriately when it occurs. A manager who knew, or should have known, about misconduct within their area of responsibility and failed to act may themselves now be in breach of FCA rules and held personally accountable.
What firms should be doing now
Firms should expect an increase in formal investigations and should be prepared for those investigations to be more sophisticated, particularly where alleged misconduct occurred outside the workplace.
Firms that have not already done so should, as a priority, be acting on the following:
- Reviewing disciplinary, grievance and whistleblowing policies to expressly address non-financial misconduct and reflect the FCA's requirements.
- Checking that investigation frameworks can properly handle allegations of serious non-financial misconduct, including conduct occurring outside the workplace.
- Ensuring fitness and propriety assessments for senior managers and certified persons now incorporate non-financial misconduct considerations.
- Encouraging and enhancing a culture of accountability – proactively promoting an environment where concerns can be raised and inappropriate behaviour addressed.
- Adjusting regulatory reference processes to capture non-financial misconduct findings.
Our cross-firm expertise combining employment, regulatory and investigative expertise puts us in an ideal position to advise on the new regime. Please contact your normal Mishcon contact should you wish to discuss further.