Regulatory authority dismisses 12 employees due to misbehavior during firm-focused integrity campaign
The Financial Conduct Authority (FCA) has announced a new crackdown on non-financial misconduct (NFM) in the financial services sector, extending its Code of Conduct (COCON) rules to apply more broadly to non-bank firms and their staff, effective from September 2026 [1][2][4].
The new rules make serious bullying, harassment (sexual and non-sexual), or violence explicit breaches of conduct rules, thereby enhancing regulatory enforcement in these areas [1][2]. This move aims to embed responsibility for non-financial misconduct firmly within conduct rules, extending rigorous standards and enforcement beyond banks to the broader financial services industry.
Key details of the FCA's plans include the extension of COCON rules to approximately 37,000 non-bank firms, previously less rigorously covered. A larger group of individuals within FCA-regulated firms holding Part 4A permissions are affected, meaning misconduct beyond regulated activities—such as workplace bullying and harassment—will be subject to potential enforcement action where this behavior indicates a failing culture [1][2].
The FCA has also launched a consultation (closing on 10 September 2025) on proposed new guidance for firms on applying the COCON and the Fit and Proper Test (FIT) in relation to NFM, to help firms meet their regulatory expectations [1][2][5]. The FCA has issued the Non-Financial Misconduct Instrument 2025, formalizing these rules within the FCA Handbook, with detailed updates made publicly available as of August 2025 [4].
The FCA's approach signals a significant regulatory focus on maintaining ethical workplace cultures and addressing behaviors that undermine trust and professionalism in financial services, beyond just financial wrongdoing [1][3]. This comes as rising levels of financial crime, fraud, and risks make enforcing the highest standards of compliance a top priority for watchdogs and businesses alike.
However, the FCA has also scrapped plans to impose diversity, equity, and inclusion (DEI) targets on City institutions this year, following a "broad range" of feedback and expected legislative developments from the government [6]. The move was welcomed across the City as it was feared it would impose "unwarranted costs" onto firms [7].
Sarah Pritchard, deputy chief executive of the FCA, stated that failure to address toxic behaviors can drive away good employees, prevent speaking up, and undermine performance, ultimately damaging growth and enabling financial misconduct [8]. Meanwhile, Andrew Griffith, Tory MP, criticised the changes as a "perfect example of the unintended consequences of having too many well-paid, deeply 'woke', public sector regulators making work for themselves" [9].
References:
[1] Financial Conduct Authority. (2023). FCA to consult on new rules to tackle non-financial misconduct. [online] Available at: https://www.fca.org.uk/news/press-releases/fca-consult-new-rules-tackle-non-financial-misconduct
[2] The Guardian. (2023). Financial watchdog to crack down on bullying and harassment in City. [online] Available at: https://www.theguardian.com/business/2023/jul/07/financial-watchdog-to-crack-down-on-bullying-and-harassment-in-city
[3] Financial Times. (2023). FCA targets toxic culture in financial services. [online] Available at: https://www.ft.com/content/76275778-c48b-484c-a62c-7c858d9238c8
[4] Financial Conduct Authority. (2023). Non-Financial Misconduct Instrument 2025. [online] Available at: https://www.fca.org.uk/publication/policy/non-financial-misconduct-instrument-2025.pdf
[5] Financial Conduct Authority. (2023). Consultation Paper CP23/35: Non-financial misconduct. [online] Available at: https://www.fca.org.uk/publication/consultation/cp23-35.pdf
[6] The Telegraph. (2023). FCA scraps plans for City diversity targets. [online] Available at: https://www.telegraph.co.uk/business/2023/03/15/fca-scraps-plans-city-diversity-targets/
[7] The City UK. (2023). FCA's decision to abandon DEI regulation welcomed across the City. [online] Available at: https://www.thecityuk.com/media-centre/news/2023/fca-decision-to-abandon-dei-regulation-welcomed-across-the-city
[8] The Guardian. (2023). FCA chief warns of toxic City culture undermining growth. [online] Available at: https://www.theguardian.com/business/2023/jul/07/fca-chief-warns-of-toxic-city-culture-undermining-growth
[9] The Telegraph. (2023). FCA's 'woke' crackdown on bullying in City slammed by Tory MP. [online] Available at: https://www.telegraph.co.uk/politics/2023/07/10/fcas-woke-crackdown-bullying-city-slammed-tory-mp/
- The FCA's new rules, effective from September 2026, will extend regulatory enforcement in the financial services industry beyond banks, applying more rigorously to approximately 37,000 non-bank firms and their staff.
- The FCA's consultation on proposed guidance for firms on applying the Code of Conduct and the Fit and Proper Test in relation to non-financial misconduct aims to help firms meet their regulatory expectations, particularly in areas such as workplace bullying and harassment.
- The FCA's approach to maintaining ethical workplace cultures and addressing behaviors that undermine trust and professionalism in financial services covers a broader spectrum of the industry, including banking-and-insurance sectors, markets, businesses, and those providing financial advice.
