New rules for non-financial misconduct

As the Financial Conduct Authority (FCA) prepares to implement its much-anticipated non-financial misconduct (NFM) rules effective from 1 September 2026, industry experts are weighing in on the implications of this significant shift. Priya Dave, Of Counsel at Corker Binning and a former contentious regulation lawyer at the FCA, emphasises the paradigm shift this new directive introduces. She states that “the long-anticipated date for the new rules on non-financial misconduct coming into force is upon us.” Dave explains that NFM will now be firmly positioned within the Conduct rules, moving these matters beyond being solely an HR issue.

This change highlights a new obligation for non-bank financial institutions to treat bullying, harassment, and similar conduct as legitimate regulatory concerns with tangible effects on the assessments of senior managers' fitness and propriety. The repercussions for senior managers are clear; those who engage in or overlook NFM risk drawing the attention of the FCA’s Enforcement Division. Dave remarks that “to date, the FCA has shown limited appetite for pursuing enforcement action in relation to NFM,” but warns firms not to become complacent. She argues that “the extension of the NFM rules from banks to non-banks highlights the importance the FCA places on workplace culture and conduct.”

Commenting on the broader ramifications, Imogen Makin, counsel at WilmerHale, declares that “the FCA's new non-financial misconduct rule represents a watershed moment for culture and conduct in financial services.” She notes that firms must now view serious instances of bullying and harassment as potential regulatory issues rather than mere employment disputes. Many organisations will likely have fortified their internal policies to appear compliant with the new rules. However, Makin cautions that “the real challenge will be in applying this consistently and fairly in practice in the months to come.”

Collaboration among Boards, HR teams, compliance functions, and in-house legal departments will be essential when addressing allegations, as they now also carry the potential to affect regulatory standings. Although the FCA has provided some reassurance that it does not expect firms to oversee employees’ personal lives, Makin indicates firms must still consider how conduct outside the workplace may be relevant to an individual’s capacity to fulfil a regulated role.

Makin concludes with a note of caution, suggesting that there is potential for the FCA to target firms and individuals who do not adhere to the regulations. She predicts that enforcement will likely focus on the most egregious cases, signalling that the regulator will be monitoring whether firms truly embody the intent of the new guidance. Therefore, the enduring message is clear: non-financial misconduct won't be tolerated, and organisations must demonstrate their commitment through action and internal communication.