On 12 December 2025, the Financial Conduct Authority (FCA) published its long-awaited final guidance on "non-financial misconduct" (NFM), the term used to describe misconduct such as bullying, harassment and discrimination. The new guidance – contained in Policy Statement PS25/23 which comes into force from 1 September 2026 – broadly covers:
- Amendments to the FCA Code of Conduct (COCON) sourcebook to explain how instances of NFM can constitute a breach of the conduct rules.
- Updates to the Fit and Proper Test for Employees and Senior Personnel (FIT) sourcebook to clarify how NFM affects assessments of fitness and propriety.
The guidance follows an overwhelmingly positive response to the FCA's July 2025 consultation on NFM proposals – contained in CP25/18 – with 95% of respondents agreeing that new Handbook guidance was needed to help with the assessment of potential NFM.
Background to the changes
On 2 July 2025, the FCA confirmed in its joint policy statement and consultation paper CP25/18 that it would expand the scope of COCON to more closely align the rules on NFM between banks and non-banks, meaning NFM towards colleagues comes within scope of the conduct rules when it occurs in relation to the performance of the individual's role. The scope of the performance of the individual's role is wide, and includes, for example, any conduct by the individual on the firm's premises or at a firm social event. Alongside that update to the rules, the FCA consulted on whether extra Handbook guidance in COCON and FIT was needed to help firms apply the rules, making it clear that it would only take the guidance forward if respondents supported it. Our article on the approach taken by the FCA in CP25/18 can be found here.
The FCA received 79 responses to CP25/18 from firms, trade associations, law firms, consultancies, interest groups and private individuals, with 77 respondents agreeing that new Handbook guidance in the COCON and FIT sourcebooks was indeed necessary.
Summary of the new rules
The new guidance covers two key areas, COCON and FIT:
COCON Guidance
The changes to COCON include factors to consider when determining whether NFM breaches the conduct rules, examples of reasonable steps for managers to protect staff against NFM, and a new example of conduct that would breach the requirement to act with integrity (Individual Conduct Rule 1), specifically subjecting a member of the workforce to significant detriment for using the firm's whistleblowing procedures. In response to requests for additional guidance, the FCA has included a suite of flow diagrams illustrating how COCON applies and the process for determining whether NFM breaches the rules.
The FCA explains that NFM includes a wide range of behaviour, and that it uses the words 'bullying' and 'harassment' as shorthand terms to describe unwanted conduct that has the purpose or effect of violating a colleague's dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment, echoing the wording in the Equality Act.
As ever, misconduct outside of the workplace that is not related to work cannot constitute a breach of COCON but may be relevant to an individual's fitness and propriety.
FIT Guidance
The FCA has added guidance to help firms assess whether they need to investigate allegations about an individual's private life, making it clear that firms are not expected to investigate every aspect of an employee's personal life. For example, firms do not need to look into any allegations that, even if true, would not be relevant to fitness and propriety.
On social media, the FCA has confirmed that an individual's social media activity in their private life will be relevant to their fitness and propriety only if it indicates a material risk that they will breach regulatory standards and requirements, with examples including threats of violence or clear involvement in criminal activities.
Comment
The FCA has made it clear that public trust in financial services is paramount, and where misconduct goes unchecked, it can harm individuals, firms and confidence in the sector. Tackling NFM helps foster healthy and inclusive workplace cultures where people are empowered to speak up and raise concerns, supporting the FCA's objectives by supporting firms to make fair, consistent decisions and take decisive action when standards are breached.
The new rules and guidance are the culmination of considerable work by the FCA over recent years, and they will expect firms to take it seriously. That will involve firms thinking about how best to integrate the new rules into existing policies and procedures, and the extent to which any changes need to be made to existing frameworks around how to mitigate, escalate and appropriately investigate NFM. Investigating and managing known instances is never just about compliance. Each case carries the risk of regulatory scrutiny, reputational damage, and operational disruption. The real effort lies in ensuring every step is documented, defensible, and proportionate to the risk involved. Cutting corners – whether on evidence gathering or remediation – can expose firms to far greater liabilities down the line.
Whilst the publication of the new guidance brings the FCA's policy work on NFM to a close, Sarah Pritchard, Deputy Chief Executive of the FCA, noted in her foreword to the guidance that, "[The FCA] will now focus on how firms are tackling [NFM] in practice". So far, the FCA has been content for incidents of NFM to be dealt with by firms themselves, except in the most serious of cases (such as involving the commission of a criminal offence). Whether this focus will lead to an increase in FCA interventions, or enforcement action for the most egregious of breaches, remains to be seen.