FCA responds to Committee recommendations in 2024 “Sexism in the City” report

Overview

On 28 October 2025, the House of Commons Treasury Committee (the Committee) published a letter from the Financial Conduct Authority (FCA), outlining the steps that the FCA has taken to investigate and uncover instances of non-financial misconduct (NFM) in response to the Committee’s 2024 “Sexism in the City” inquiry report. NFM includes behaviours such as bullying, harassment or violence, and is now a matter of regulatory concern and the letter provides the latest insight into the FCA’s ongoing attention to NFM.

In its letter, the FCA responded in relation to several key topics, including:

1. Enforcement of the Worker Protection Act;
2. Use of NDAs in cases of NFM;
3. Supervisory actions in relation to NFM; and
4. Supervisory cases relating to NFM.

As a reminder, the FCA also noted that it has extended the NFM rules to non-banks, effective from 1 September 2026. However, with the industry watching closely following the FCA’s wider DE&I proposal’s being paused, the FCA has not yet decided whether to make available any additional interpretation guidance, with a decision is expected by the end of this year.

 

Enforcement of the Worker Protection Act

The Worker Protection (Amendment of Equality Act 2010) Act (the WP Act), which came into effect in October 2024, introduced a new duty on employers to take reasonable steps to prevent sexual harassment of their employees in the workplace. The Committee recommended that the Equality and Human Rights Commission (EHRC) and the FCA clarify how they will work together to enforce the WP Act. In its response to the Committee, the FCA stated that it had recently closed its consultation on guidance in relation to “tackling non-financial misconduct in financial services” and was continuing to work with the EHRC in relation to any potential further guidance. It is expected that the guidance will come into force during the course of 2026.

 

Use of NDAs in cases of NFM

In its report, the Committee recommend that the FCA collect data on the use of non-disclosure agreements (NDAs) by regulated firms in cases of NFM. In response, the FCA conducted a survey of 1,028 regulated wholesale firms in February 2024, covering a range of subsectors. The survey was of recorded incidents of NFM cases in 2021-23, including methods of detection and resolution in these sectors.

Published on 25 October 2024, the findings showed that while the overall number of reported NFM incidents increased over the 3 years surveyed, the total number of NDAs signed by complainants fell over the same period in the wholesale banking sector and remained static in the other sectors surveyed. In summary, the number of NDAs signed by complainants was 87 in 2021, 73 in 2022, and 51 in 2023. This reduction suggests that the use of NDAs is declining in popularity as a method of NFM resolution and is allowing more flexibility for making disclosures to the FCA, other regulators and law enforcement agencies.

This is a trend we expect to continue as a result of the new restrictions on the use of NDAs that prevent victims of criminal conduct from disclosing certain information which came into force on 1 October 2025.  The FCA has made clear to authorised firms that NDAs cannot be used to prevent public interest disclosures to the FCA. The use of NDAs where there are allegations of work-related harassment or discrimination may be further restricted in light of the government’s stated intention to impose a ban on the use of NDAs in this context, albeit it is currently unclear when these restrictions will take effect.

 

Supervisory actions in relation to NFM

The Committee further queried what supervisory actions or interventions were undertaken with regulated wholesale firms following analysis of their responses to the FCA’s culture and NFM survey. The FCA confirmed that it has followed up with firms which appeared to be outliers compared to their peers to understand why this might be the case. The FCA has also engaged with industry associations and standard setting bodies to encourage them to identify what best practices can be developed to help their members address NFM. Examples of best practices adopted include the delivery of workshops and webinars covering the findings from the survey and the regulatory expectations for how firms should handle instances of NFM.

The FCA is currently taking forward supervisory work across the whole of the wholesale brokers portfolio to test whether firms have effective detective and preventative controls at an operational level so that cases of NFM can either be prevented, stopped in their early stages, or addressed appropriately after they have taken place. However, the FCA does not have any immediate plans to issue a similar survey for other sectors.

 

Supervisory cases relating to NFM

In relation to supervisory cases, the FCA stated that it dealt with 123 cases in 2022, 168 cases in 2023, and already 176 cases in the first nine months of 2025. The FCA currently has 76 open supervisory cases that have been tagged as relating to NFM. However, this figure may understate the FCA’s work on this issue; for example, one case could be investigating multiple reports of NFM.

In addition, the FCA has one Enforcement case open relating to NFM, with a Decision Note published on this case in March 2025. Overall, the FCA pointed to an upward trend regarding the total number of supervisory cases concerning non-financial misconduct per year since 2022.

Further, the Government’s proposal that reporting of sexual harassment shall constitute a qualifying disclosure for the purposes of whistleblowing protection is likely to continue this upward trend. This change is expected to come into force in April 2026.

 

Conclusion

NFM is a key focus area for the FCA and this will continue to be the case with the expansion of NFM to non-banks in September 2026. Further, the recent and expected changes to related employment laws provide more protection to employees who have suffered as a result of NFM. Therefore, it is essential that firms have in place a clear strategy, robust systems and reporting procedures in relation to NFM. These should be aimed at generating the culture change required by the “Sexism in the City” report, reducing instances of NFM and adequately dealing with NFM when it arises.

Further communications are expected between the committee and the FCA during the course of 2026. If you wish to discuss how the FCA’s supervisory actions, the increase in employment protection and the expansion of NFM to non-banks may impact your business, please do reach out to your regular DLA Piper contact or the authors of this article.