Tackling non-financial misconduct in financial services (“NFM”). Changes to the FCA's Conduct Rules

New rule under COCON 

The Financial Conduct Authority (FCA) is introducing a new rule under the Code of Conduct (COCON) to explicitly address non-financial misconduct (NFM), such as bullying, harassment, and violence, within financial services. This rule expands the circumstances in which such behaviour will be treated as a regulatory issue. 

What firms are in scope? 

All FSMA Firms with a Part 4A permission. The NFM Rules apply to staff in those firms who are subject to COCON. 

Territorial scope? 

The territorial scope for the fitness and propriety requirements and COCON remain unchanged. 

Under the rule, if a conduct rules staff member behaves towards another individual connected to the firm in a manner that is unwanted and: 

This definition closely mirrors that of harassment under the Equality Act 2010 and is not limited to interactions with direct colleagues. It can also apply to behaviour towards contractors, service providers, or others connected to the firm or its group. 

The new rule will come into effect on 1 September 2026. Importantly, it will not apply retrospectively. This contrasts with the Worker Protection (Amendment of Equality Act 2010) Act 2023, which requires employers to take proactive steps to prevent harassment, including historical incidents during work-related events. 

Proposed guidance on non-financial misconduct 

The FCA is also consulting on guidance to support the new COCON rule, expected to be implemented at the same time. This guidance is intended to clarify how the new rule will be applied, particularly in borderline or ambiguous cases. 

Key points from the draft guidance include: 

Scope of application 

The new rules will not apply to overseas firms directly. However, certain non-UK staff may be caught by the rules if they perform regulated roles at UK-authorised firms. This includes: 

Changes to fit and proper assessments 

Under the proposed changes, non-financial misconduct must be considered as part of “fit and proper” assessments for senior managers and certified individuals, including material risk takers and heads of significant business areas. 

The scope of misconduct relevant to fit and proper assessments is broader than under COCON. It includes: 

The central test is whether the individual continues to meet the standards of the regulatory system. Misconduct, even outside work, may be relevant if it suggests: 

Reasonable steps 

The proposed changes to the Handbook guidance also includes examples of reasonable steps senior managers could take to protect staff against NFM and confirms that a failure to do so could amount to a conduct issue for the senior manager in question. These include intervening to stop inappropriate behaviour, taking complaints seriously and dealing with them appropriately, and providing a safe environment for people to raise concerns about inappropriate behaviour. The latter reinforces the expectation that the FCA has had for a number of years around firms establishing a ‘speak up’ culture.  

The consultation on the draft guidance is open until 10 September 2025. The FCA intends to set out its final regulatory approach before the end of the year. 

Need help?

We have recently published a video with our Lead Director, and Head of Investment Firms Stephen Roberts, where he discusses the FCA’s sharpened focus on non-financial misconduct, why it's moved higher up the regulatory agenda and what firms need to do now to stay compliant. If you have any questions, please do not hesitate to reach out. 

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