IE has rounded up a series of comments after the FCA published some guidance on non-financial misconduct;
WILMERHALE
Commenting on the FCA’s final guidance to tackle serious non-financial misconduct in financial services, published recently, Imogen Makin, counsel at WilmerHale, says:
“The FCA’s Final Guidance on Non-Financial Misconduct, published this morning, should prove useful for firms in their implementation of the rules. For example, it includes flow diagrams setting out the steps to determine whether conduct is in scope of COCON and potentially represents a breach.
“It also includes guidance on the applicability of the rules to staff in a shared function, where certain individuals deal with financial services business and others do not. In these circumstances, conduct will be in scope if either the perpetrator or subject deals with the financial services business. This seems like an overreach and means that individuals who do not deal with the financial services business of a firm can now be subject to FCA rules. As a result, firms will need to ensure that almost all employees are trained on the new rules; only those that work in a separate function that does not interact at all with the financial services business of a firm will be out of scope.
“The FCA has also declined to provide more case studies, stating that the guidance cannot cover every scenario and the primary responsibility for preventing and dealing with it lies with firms themselves. This is particular cause for concern, given that the FCA confirmed this morning it will now “focus on how firms are tackling it [NFM] in practice”. Those in scope of the new rules should, therefore, ensure they focus on training their employees and enhancing their policies and procedures now, to make clear the conduct that is unacceptable and that non-financial misconduct will not be tolerated. This should be done in advance of 1 September 2026 when the new rules come into force, as FCA scrutiny now seems inevitable.”
KINGSLEY NAPLEY
Commenting on the FCA guidance note to assist financial firms in the standards the regulator expects in the areas of non-financial misconduct, James Alleyne, partner in the Financial Services Regulatory team at Kingsley Napley LLP, says:
“The FCA has long signalled its intention to raise standards in the regulated sector and will hope this guidance gives firms the certainty they have been craving to implement the new rules and standards effectively. The regulated community will particularly welcome the clarifications around fitness and propriety assessments as well as the distinction between the private and professional lives of staff subject to the conduct rules. One big question is whether or not the FCA will start enforcing directly for non-financial misconduct or instead will rely on firms to police this issue; only time will tell what the answer to that is.
Francesca Lopez, senior associate in the Employment team at Kingsley Napley, adds:
“Regulated firms now have until September 2026 to get ready for the new conduct rules to take effect. This means there is still time to review and reiterate policies on bullying, discrimination, and harassment for example, and to ensure whistleblowing channels are working effectively. Key will be training, ensuring all staff understand the behaviours that are unacceptable and that managers are equipped to identify and handle serious issues of non-financial misconduct. These have long applied from an employment law perspective but the fact the regulator may now take an interest may have greater firm and career reputation implications.”
CORKER BINNING
Commenting on the FCA’s final guidance to tackle serious non-financial misconduct in financial services, published recently, Priya Dave, Of Counsel at Corker Binning and a former contentious regulation lawyer at the FCA, says:
“In advance of the new rules on non-financial misconduct (NFM) coming into force on 1 September 2026, FCA-regulated firms have been eagerly awaiting today’s guidance on how to apply them. While some of the FCA’s commentary is genuinely useful, much of it still leaves firms in the dark. The FCA pointedly declines to define ‘non-financial misconduct’, and the guidance stops well short of mapping out what will – or won’t – count as NFM. Firms will therefore have to exercise their own judgement when deciding whether particular behaviours cross the line.
“In practice, firms now need to digest the guidance and decide how to embed the new rules. That means putting in place robust policies and procedures to show they’ve taken all reasonable steps to prevent and handle NFM, making sure staff understand how the rules apply to them, and meeting reporting obligations under SUP (the Supervision section of the FCA’s Handbook).
“One particularly opaque area in the guidance areas is social media: the FCA says individuals may lawfully express their views online without undermining their fitness and propriety, yet also says those same lawful views may still be relevant to assessing fitness and propriety.
“So far, the FCA has shown limited appetite for pursuing enforcement action in relation to NFM. However, firms should not assume this stance will continue. The year 2026 is likely to be a pivotal point in gauging the regulator’s willingness to step foot more firmly into the NFM arena.”
LMA
Arabella Ramage, Legal and Regulatory Director, Lloyd’s Market Association says on FCA confirms final guidance to tackle serious non-financial misconduct in financial services released today:
“The Lloyd’s Market Association supports the Financial Conduct Authority’s (FCA) commitment to tackling non-financial misconduct and creating a safe and inclusive financial services sector. Clear, consistent standards and guidance are essential to protect employees, uphold integrity, and ensure our industry remains a career of choice for the best talent. We urge the FCA to keep this guidance under regular review to ensure that it delivers the right outcomes.”
Be the first to comment