Regulations by FCA Concerning Improper Conduct Beyond Financial Aspects
The Financial Conduct Authority (FCA) has announced significant changes to its Code of Conduct (COCON) that will extend the regulatory perimeter to cover serious non-financial misconduct (NFM) in the workplace for non-bank financial services firms. The new rules, effective from September 1, 2026, will bring approximately 37,000 additional non-bank firms under the COCON rules.
The new rules, codified as COCON 1.1.7FR, will explicitly cover serious misconduct such as bullying, harassment, and violence. The FCA clarifies that such misconduct must have a significant negative effect, such as being violating or humiliating, to fall within the scope of the new rules. The misconduct must also be towards a colleague and relate to the part of a non-bank's business that conducts SM&CR financial activities to amount to a breach of COCON.
The FCA's aim is to align the approach to NFM between banks and non-banks, ensuring consistent regulatory standards across the financial services sector. The rule applies to workplace misconduct between colleagues, not to conduct occurring in private life, although such conduct may still influence assessments of fitness and propriety under the Senior Managers and Certification Regime (SMCR).
Firms will be required to disclose serious substantiated personal misconduct in regulatory references. The FCA is consulting on updated handbook guidance to help firms apply these rules and the fitness and propriety standards consistently, with final guidance expected by the end of 2025.
The FCA has shown its commitment to combating NFM, with the policy statement published on July 2, 2025. The authority may use supervisory, rather than formal enforcement, powers more frequently to combat NFM. The FCA has also reminded firms of their duty to notify conduct rules staff about the new rules and take all reasonable steps to ensure they understand how they apply.
The FCA has shown it is not afraid to use examples of NFM to support findings that an individual has breached ICR1 in several recent high-profile cases. The amendments to the rules will come into force on September 1, 2026, and it is likely that the FCA will take enforcement action in the most serious cases of NFM in the future.
The new rules do not apply retroactively and do not apply to payments, e-money firms, regulated investment exchanges, or credit rating agencies. The FCA has clarified that the requirement for NFM to be "serious" to breach a conduct rule is not removed in the new proposals. The FCA's proposed guidance includes examples of failing to take reasonable steps to prevent NFM as a breach of ICR2 by a manager.
In summary, the FCA's finalized amendments to COCON mark a significant step toward improving workplace culture and accountability across the UK financial sector. The new rules will extend serious workplace-related non-financial misconduct coverage to non-bank financial firms, focusing on bullying, harassment, and violence.
- The FCA's policy-and-legislation changes in employment law will mandate non-bank financial services firms to adhere to the new Code of Conduct (COCON) rules from September 1, 2026, covering serious non-financial misconduct, including bullying, harassment, and violence.
- As part of the FCA's efforts to maintain consistent regulatory standards in the finance sector, the new COCON rules will align the approach to non-financial misconduct (NFM) between banks and non-banks, with a focus on business conduct and policy-and-legislation.
- In the realm of general-news, the FCA's policy-and-legislation changes in employment law will require firms to disclose serious substantiated personal misconduct in regulatory references and may use supervisory powers more frequently to combat NFM.
