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A spotlight on non-financial misconduct: FCA tackling bullying, harassment and violence in financial services

08 July 2025

The message is clear - serious misconduct such as bullying, harassment and violence is a matter of regulatory concern.  The FCA is changing its rules to better capture non-financial misconduct in non-banks and consulting on whether extra handbook guidance is required.

With the focus firmly on non-financial misconduct the FCA has published CP25/18: Tackling non-financial misconduct in financial services outlining:

A policy statement

The conduct rules in banks and non-banks for cases of serious non-financial misconduct will be aligned.  The FCA wants to:

  • Give firms confidence to take robust action against serious misconduct.
  • Drive consistency across the financial sector.
  • Make it clearer when non-financial misconduct can be a breach of the FCA rules. 

The new rule amending the scope of the Code of Conduct in non-banks will apply from 1 September 2026 and will not apply retrospectively.  Essentially the new rule brings more instances of non-financial misconduct (such as bullying, harassment and violence) into the FCA's remit.  The rule has been revised to align more clearly with employment law, to reduce the risk of unfair outcomes. The FCA clarify that the rule is not limited to conduct related to a "relevant protected characteristic".  They have framed it to cover a wider range of workplace conduct that they consider relevant to their statutory objectives.

Further consultation

The FCA are also consulting on whether additional Handbook guidance is needed to support firms in applying the rules consistently.  Some key elements of guidance for consultation include for example:

  • Guidance and examples on the boundary between work and private life. 
  • Factors to consider when determining whether the misconduct was "serious".
  • Explanatory material on how various types of conduct, including non-financial misconduct are relevant to the fit and proper test for employees and senior personnel. 

Appendix 2 of the paper sets out draft Handbook text as part of the consultation.  The consultation is open until 10 September 2025 and responses can be sent using the online response form.

The FCA has made it clear that it will only take the guidance forward if there is clear support for it.  In an update published in March 2025 the FCA confirmed it would not take forward the proposals on diversity and inclusion. 

Comment

The FCA is robust with its goal of promoting healthy and inclusive workplace cultures and deepening the trust in financial services.  The direction of travel is clear for the industry – non-financial misconduct will not be tolerated and is bad for business.  We have seen the Sexism in the City report where a number of recommendations have been made for the financial services industry (read more about it here) and the Lloyd's New Conduct Framework.  The Lloyd's Framework proposes to implement a suite of changes to modernise and streamline its approach to dealing with poor conduct and behaviours in the market – with a focus on the better alignment with firms' own internal HR and disciplinary processes.  Non-financial misconduct is under comprehensive scrutiny from all fronts.

This is not a tick box exercise.  Employers which proactively transform their workplace culture into an inclusive and safe environment will benefit greatly.  This is easy to say but it is very challenging to achieve in practice. It takes a deep understanding of cultural problems, how to form and shape leadership norms, and the courage (and tenacity) to tackle underlying root issues which are driving the surfaced poor behaviours. These very real challenges are for leadership to embrace and tackle head on, rather than the regulator as a standard-setter. With the duty on employers to prevent sexual harassment already in place (since October 2024) and the Employment Rights Bill promising further regulations on harassment, along with the FCA's increasing focus on non-financial misconduct, now is the time for leaders to take bold proactive and preventative action.

At DWF, we can provide:

  • Workplace culture audits to stress test organisational culture, identify potential behavioural risk exposure and develop risk-based remedial interventions that will actively mitigate culture risk.
  • Human rights impact assessments and due diligence reviews. 
  • Independent reviews and/or design of ethical conduct and business integrity frameworks aligned to corporate purpose, valued behaviours and regulatory compliance requirements (including ethical decision-making and ethical business scenario analysis).
  • Inclusion and diversity strategic design, development and implementation including dashboards, data and metrics, policies and procedures and global good practice. 
  • Tailored education programmes to embed cultural change targeting boards, executive management teams, people managers and wider employee base.

Contact our experts today if you require any advice or guidance.

Further Reading