Introduction
With the internet fixated on a very public workplace relationship, you might find yourself wondering: what would happen if two colleagues at your firm were publicly revealed to be romantically involved? Your instinct might be that, as long as the relationship is consensual, it’s a private matter - not something for your employer, let alone the FCA, to worry about.
But that’s not always the case.
Why does the FCA care?
The FCA has made clear – as shown by their recent consultation – that they are increasingly concerned about non-financial misconduct. A new rule, coming into force in September 2026, will be added to COCON (the Code of Conduct), targeting non-financial misconduct which is described as conduct that has the purpose or effect of:
"(i) violating B's dignity; or
(ii) creating an intimidating, hostile, degrading, humiliating or offensive environment for B; or
(b) conduct that is violent to B."
Here, "B" includes employees of the firm and others providing services to the firm.
The FCA is also consulting on guidance to help interpret this rule. Key proposals include:
- Blurring the lines between personal and professional: Serious non-financial misconduct may still breach Individual Conduct Rule 1 if it relates to the firm’s activities - whether regulated or unregulated - even if it doesn’t occur in the workplace. This means firms will need to exercise judgment in determining whether conduct that appears personal is sufficiently connected to the firm to warrant regulatory scrutiny.
- Managerial accountability: If managers fail to prevent harassment or other misconduct, they could breach Individual Conduct Rule 2, which requires acting with due skill, care, and diligence. This applies to both the manager of the alleged perpetrator and the manager of the affected individual.
- Fit and proper assessments: The FCA proposes that non-financial misconduct - even outside the workplace - should be considered when assessing the fitness and propriety of senior managers and certified staff.
Historically, the FCA has left it to firms themselves to police non-financial misconduct, but the FCA may step in if it considers a firm has not handled an incident appropriately. In extreme cases, like that of Crispin Odey, that may include enforcement.
Workplace relationships: Not necessarily misconduct, but risky
A consensual relationship between colleagues is not, in itself, non-financial misconduct. However, it can introduce several risk factors that firms must manage carefully.
Sexual harassment
Where there is a power imbalance - for example, between a manager and a junior employee - the risk of actual or perceived sexual harassment increases. If harassment occurs, the perpetrator may breach the new COCON rule, and managers may be held accountable under Conduct Rule 2, which requires acting with due skill, care, and diligence, for failing to act.
Transparency
Many firms require employees to disclose workplace relationships. If a relationship is concealed in breach of policy, it could raise employment concerns and undermine trust - particularly if conflicts of interest arise. A deliberate breach of staff rules can impact an assessment of fitness and propriety.
Work events
The FCA’s guidance suggests that the boundary between personal and professional life is not always clear-cut, and firms are likely to have to make this judgement call. This is especially true at work events, where misconduct is more likely to fall within the regulatory scope. The SRA, for example, has treated a nightclub outing following a work Christmas party as a work-related event. Would a corporate-sponsored box at a concert venue count? Possibly.
Others involved
If others in the firm are aware of a relationship and are pressured to keep it secret - especially if the individuals involved are senior - this could create a hostile or intimidating environment, potentially amounting to non-financial misconduct under the new COCON rule.
What can you do to prepare for such situations?
Internal policies
Ensure your firm has clear, well-communicated policies on workplace relationships and non-financial misconduct. These should include procedures for disclosure, reporting, and managing conflicts of interest.
Know the warning signs
Implement training to help employees and managers recognise when personal conduct may cross into regulatory territory. Awareness is key to early intervention.
Knowing when to notify the FCA
Familiarise yourself with the FCA’s expectations around reporting. If conduct could impact the firm’s integrity, reputation, or compliance, it may need to be disclosed.
Conclusions
People working in FCA-regulated firms are, of course, entitled to a personal life. But with the FCA’s growing focus on non-financial misconduct - and the introduction of the new COCON rule in 2026 - firms must be alert to how personal relationships can become regulatory concerns.
It has perhaps never been more important for FCA-regulated firms to ensure their policies are up-to-date and sufficient to deal with issues relating to personal relationships, to educate their teams, and prepare for the evolving expectations around conduct.
Watch this space for the launch of the Mishcon de Reya Non-Financial Misconduct Hub later this year, which will offer practical guidance on navigating these issues.