The FCA’s Instrument FCA 2025/60 implements changes arising from CP25/18: Tackling non-financial misconduct in financial services and its associated PS25/23: Tackling non-financial misconduct in financial services | FCA, which aim at enhancing conduct expectations across the UK financial services sector. In line with the FCA’s Strategy 2025-30, the changes introduce rules and guidance on nonfinancial misconduct (NFM) to raise standards, increase accountability, and build trust in the industry. They extend established conduct requirements beyond traditional financial misconduct to address behaviours such as bullying, harassment, discrimination, and violence where these occur in workassociated contexts.
Why the FCA Is Changing the Rules
The FCA’s strategy emphasises the importance of healthy workplace culture and good conduct as foundational to consumer protection, market integrity, and effective competition. Behaviour that undermines dignity or creates an intimidating or hostile environment can indicate cultural weaknesses that may also affect governance, risktaking and decision making. This focus on NFM complements traditional prudential and conduct frameworks by addressing behavioural harms that are not strictly financial but have significant regulatory relevance.
Before these reforms, firms often lacked clarity on when serious nonfinancial behaviours could constitute breaches of conduct rules, especially outside the banking sector. The changes now create consistent expectations across SMCRregulated firms.
What Has Changed
- New Conduct Rule for NFM (COCON 1.1.7FR)
The FCA has amended the Code of Conduct (COCON) to explicitly capture serious nonfinancial misconduct as a Conduct Rule breach. This aligns the approach for nonbanks with that already in place for banks, closing a gap where firms previously had to link such behaviour to regulated activities to take action.
Serious nonfinancial misconduct includes behaviour that:
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- Violates a person’s dignity or creates an intimidating, hostile or degrading environment; and
- May involve bullying, harassment, violence or similar behaviours toward colleagues.
These rules will apply to all FSMA Part 4A firms subject to the Senior Managers and Certification Regime (SMCR) from 1 September 2026.
- Enhanced Fit & Proper Assessment (FIT)
The FCA has also updated the Fit and Proper Test for Employees and Senior Personnel (FIT) to confirm that NFM should be considered in assessing an individual’s suitability for regulated roles. This includes behaviour at work and, where relevant, conduct in personal or social settings that reflects on fitness.
- Handbook Guidance (PS25/23)
In response to CP25/18 consultation feedback, the FCA has finalised Handbook guidance to support consistent interpretation and application of the new rules. Key refinements include:
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- Clarifying when behaviour is “serious enough” to be a breach;
- Providing examples and flow diagrams to help firms apply the rules;
- Aligning guidance with employment law considerations and privacy boundaries; and
- Explaining that managerial accountability is relative to knowledge and authority rather than absolute.
Alignment with Strategy and Culture Objectives
The reforms are a practical step towards embedding the FCA’s strategic goals of fostering trust, integrity, and responsible conduct across the financial sector. By broadening the scope of conduct rules to include nonfinancial behaviour, the FCA intends to:
- Promote consistent standards across firms of all sizes and business models;
- Make it harder for individuals with serious misconduct histories to evade consequences through regulatory references when moving firms; and
- Encourage firms to proactively tackle cultural and behavioural risks as part of governance and risk management.
While the FCA has shelved broader Diversity and Inclusion proposals that were part of earlier consultations (CP23/20), it continues to see NFM guidance as a key tool for improving workplace culture and inclusion indirectly by reducing harmful behaviours that undermine trust and fairness.
Effective Date and Application
The new rules and guidance will come into force on 1 September 2026, aligning with the implementation of the expanded COCON provision. Firms should ensure they are ready well ahead of this date, incorporating NFM into their conduct frameworks, training, and reporting mechanisms.
Strategic Implications for Firms
- Policy and Conduct Frameworks: Firms must update their internal conduct policies to reflect the FCA’s expectations on NFM, providing clarity on what constitutes serious misconduct and how it should be handled.
- Governance and Accountability: Board and senior management oversight arrangements should explicitly consider NFM risks, ensuring robust reporting, investigation, and disciplinary processes.
- Training and Awareness: Compliance and HR teams will need targeted training to spot and address NFM, including linking misconduct to regulatory references where appropriate.
- Regulatory References: Firms must ensure that serious NFM findings are consistently reflected in regulatory references to prevent “rolling bad apples”.
Failure to adapt could expose firms to regulatory enforcement, reputational harm, and inconsistent application of conduct rules across personnel.
Conclusion
FCA 2025/60, implementing changes from CP25/18 and PS25/23, reflects a deliberate shift in regulatory focus to include behavioural conduct risk as a core component of firm culture and regulatory compliance. By codifying guidance on NFM within COCON and FIT, the FCA aims to deepen trust, improve accountability, and support a healthier culture throughout financial services — consistent with its longterm strategic objectives.
How Complyport Can Help?
At Complyport, we understand that the introduction of NFM rules under CP25/18 and PS25/23 can create uncertainty for firms, particularly in embedding behavioural and cultural expectations into existing SMCR frameworks. We support firms by providing practical, end-to-end solutions to ensure compliance while strengthening workplace culture and accountability.
- Gap Analysis and Risk Assessment: We review your current policies, governance structures, and conduct frameworks to identify gaps in addressing NFM. This includes assessing how serious non-financial behaviours such as bullying, harassment, discrimination, or other misconduct are captured under COCON and FIT obligations.
- Policies, Procedures and Governance: We help firms update and enhance internal procedures, conduct policies, escalation ladders, and reporting frameworks. This ensures clear accountability, consistent application of the rules, and alignment with FCA expectations on managerial responsibility and SMCR governance.
- Training, Awareness and Culture: We design and deliver targeted training programs for Senior Managers, Compliance, HR, and operational teams, focusing on recognising, reporting, and managing non-financial misconduct. This builds internal capability and fosters a healthy, inclusive workplace culture.
- Advisory and Ongoing Support: We provide continuous guidance on regulatory references, FIT assessments, and conduct investigations, helping firms respond confidently to supervisory scrutiny and maintain robust documentation of all NFM-related decisions.
Contact Us
To understand how these changes may impact your firm, or to discuss how Complyport can help implement a compliant and resilient NFM framework, arrange a meeting with one of our Subject Matter Experts.
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