Some comments for you on the FCA announcement clarifying expectations on bullying, harassment and violence from Norton Rose Fulbright partners Katie Stephen and Paul Griffin.
Katie Stephen, partner and London Co-Head of the Contentious Financial Services Group at Norton Rose Fulbright, said:
“Changes to the Conduct Rules, which will apply from 1 September 2026, confirm that the FCA expects all types of regulated firms to police serious instances of bullying and harassment towards fellow employees, even where it occurs outside the office or outside regulated activities. What’s more, misconduct outside work could be viewed as rendering them unfit to perform key roles in the financial services industry, even if there is no link to their work and no fear of it being repeated at work.
“Additionally, how firms deal with concerns raised and instances of misconduct will be just as – if not more – relevant to the FCA as the underlying conduct itself.
“The new policy statement and consultation reinforce the FCA’s expectation that all firms must embrace and evidence strong cultural values to avoid disciplinary sanction by the FCA. Senior managers should familiarise themselves with the rules to ensure they are discharging their own regulatory responsibility, not only by avoiding misconduct themselves but also by taking reasonable steps to encourage a psychologically safe culture within their area of the business and grasping the nettle appropriately in the event of misconduct by others.
“Given the high stakes involved in getting this wrong, the regulated sector is likely to welcome the FCA’s further consultation on guidance and examples covering the extent to which certain behaviour falls within the scope of the Conduct Rules. This will be particularly helpful in the sometimes ‘hard to judge’ categories of bullying and harassment and where conduct outside work, including on social media, becomes a matter of regulatory concern.”
Paul Griffin, partner and EMEA Head of Employment at Norton Rose Fulbright, said:
“The new Policy Statement from the FCA on how firms deal with non-financial misconduct will be welcomed by businesses. The FCA is now consulting on whether additional guidance on the proposed rule changes is needed and have confirmed that they will only take guidance forward if there is clear support to do so.
“Employers face significant legal and regulatory exposure if they fail to prevent or address non-financial misconduct – particularly sexual harassment. In addition to the FCA rules employers must adhere to the wider statutory duty to prevent sexual harassment, which means that inaction or reliance on reactive processes such as grievances or whistleblowing is no longer sufficient. Failure to take proactive steps could lead to tribunal claims, and reputational damage, as well as regulatory sanctions. The Consultation paper acknowledges that proposals put forward should be compatible with employment law, and it is to be welcomed that the FCA has taken steps to align any draft guidance more closely with employment law to reduce potential risks for employers.
“In light of the FCA proposals, employers should prioritise strengthening proactive systems, risk assessments, transparent reporting and cultural accountability. These are essential from both a regulatory and a wider employment law perspective.”
SMARSH COMMENT
Commenting on the FCA clarifying its expectations on bullying, harassment and violence, Shaun Hurst, EMEA Principal Regulatory Advisor at Smarsh, said:
“The FCA clarification extending non-financial misconduct rules to 37,000 additional firms is a welcome step that addresses a long-standing regulatory gap. It’s not surprising given the scale of the problem, as Smarsh’s research revealed that 59% of financial services employees have witnessed or experienced workplace misconduct.
“However, employees lack confidence that current systems can effectively detect these issues, with 63% expressing concerns about their organization’s monitoring capabilities. The FCA’s own data shows misconduct reports jumped 41% in 2023, and now substantiated cases must be shared through regulatory references from September 2026.
“This creates both regulatory and business imperatives. Employees signal that how firms identify and respond to misconduct directly impacts their decision to stay. In a competitive talent market, that’s significant. Sarah Pritchard was right to call unchallenged harassment ‘one of the reddest flags’ that raises questions about decision making and risk management.
“There’s a clear case for firms to leverage existing technology. AI can analyse communications data already archived for compliance purposes to identify misconduct patterns at scale. While the industry discusses AI’s broader applications, here’s an immediate use case for proactively detecting workplace issues before they escalate or appear in regulatory references.”
Be the first to comment