FCA confirms new rules on non-financial misconduct across financial services

At a glance

• From September 2026, non-financial misconduct, including bullying and harassment, will become a Conduct Rule breach in 37,000 additional financial services firms.

• Firms will also be obliged to disclose serious, substantiated personal misconduct in regulatory references.

• Proposed FCA guidance would help firms interpret how non-financial misconduct, including conduct in personal life or on social media, might impact an individual’s fitness and propriety.
  
  

Overview

On 2 July 2025, the Financial Conduct Authority (FCA) published its final policy statement and consultation paper (CP25/18) confirming that serious non-financial misconduct (NFM) – including bullying, harassment, and violence – will be treated as a breach of the Conduct Rules (COCON). The rules on non-financial misconduct, which previously applied only to banks, will be extended to approximately 37,000 non-bank financial services firms from 1 September 2026. This move is part of the FCA’s broader effort to promote healthy workplace cultures and improve accountability under the Senior Managers and Certification Regime.

 

Conduct rule change

The FCA has introduced a new rule, COCON 1.1.7FR, to clarify that serious personal misconduct (whether or not it relates to a protected characteristic under the Equality Act 2010) can constitute a regulatory breach. While the new rule will apply to misconduct between colleagues within the workplace, other forms of misconduct (such as mistreatment of clients or business contacts) may already fall within scope under existing rules. Importantly, the rule will not apply retrospectively, and firms are not expected to reassess historical conduct breaches.

 

Regulatory references

The FCA has also made clear that serious, substantiated personal misconduct must be disclosed in regulatory references, in the same way financial misconduct currently is. This is to prevent individuals from evading the consequences of misconduct by moving between firms undetected. Firms will need to ensure their systems and controls can capture and share relevant information from the go-live date.

 

Draft guidance

Although the FCA has decided not to proceed with previously proposed amendments to the Threshold Conditions or the Senior Management Arrangements, Systems and Controls sourcebook, it is consulting further on draft guidance to support consistent application of the new rules.

The FCA guidance would help firms interpret COCON and the Fit and Proper test, including how NFM may impact an individual’s fitness and propriety. This includes conduct in personal life or on social media where relevant to a role in financial services. The FCA confirms that firms are not expected to monitor employees’ private lives but should act where they become aware of credible information that could call fitness into question. Firms would typically rely on formal findings (such as tribunal decisions or regulatory sanctions) when making these judgments.

 

Next steps

The consultation on the proposed guidance is open until 10 September 2025. Final guidance, if taken forward, is expected to be published by the end of the year. The FCA is asking firms to provide feedback on whether further clarification would be helpful and proportionate.

In the meantime, all firms within scope should begin reviewing and updating their internal policies, training, and disciplinary frameworks to ensure alignment with the upcoming rule changes. Firms should also begin planning communications to relevant staff under their FSMA obligations, particularly those subject to the Conduct Rules. The FCA views poor personal conduct – especially where tolerated by a firm – as a key indicator of weak culture, poor governance, and elevated risk. Firms should expect increased regulatory scrutiny in this area as the 2026 implementation date approaches.