From September 2026, FCA guidance makes it clear that non-financial misconduct (NFM) is relevant to conduct rule compliance, fitness and propriety assessments, and regulatory references across all FCA-regulated firms, including smaller firms. Serious conduct such as bullying, harassment, discrimination, violence, or dishonesty may have regulatory consequences, even when it occurs outside core financial activities and, in some circumstances, outside the workplace.
To comply with FCA expectations, firms should establish clear behavioural standards, provide training, maintain effective reporting channels, investigate concerns fairly, and ensure relevant findings are reflected in fit-and-proper assessments and regulatory references.
| Area | What Small Firms Should Do |
|---|---|
| Conduct Rules | Update policies and guidance to reflect NFM expectations |
| Staff Training | Deliver Conduct Rules and NFM training to all relevant employees |
| Speak-Up Arrangements | Provide accessible reporting and whistleblowing channels |
| Investigations | Establish documented and fair investigation procedures |
| Record Keeping | Maintain evidence of complaints, outcomes, training, and communications |
| Fit & Proper Assessments | Consider substantiated NFM findings when assessing staff |
| Regulatory References | Ensure relevant findings are reflected where required |
| Governance | Define manager responsibilities and escalation routes |
Non-financial misconduct (NFM) refers to serious behaviour that may call into question an individual's integrity, honesty, judgment, or suitability to perform a regulated role. Examples include bullying, harassment, discrimination, violence, fraud, and other serious misconduct.
Under FCA guidance, NFM can affect Conduct Rule compliance, fitness and propriety assessments, and regulatory references.
NFM is no longer viewed solely as an HR issue. The FCA considers serious misconduct capable of undermining trust, workplace culture, and confidence in regulated firms.
Smaller firms are expected to identify conduct risks, investigate concerns appropriately, and demonstrate that they have taken reasonable steps to maintain appropriate behavioural standards.
Any individual within your firm who is subject to the FCA Conduct Rules may be affected, including:
Firms should ensure all affected staff understand the standards expected of them and receive appropriate training.
Yes. Conduct outside work can be relevant where it raises concerns about integrity, honesty, or fitness to hold a regulated position.
The FCA has cited examples including repeated fare evasion and serious violent behaviour. Private social events involving colleagues may also fall within scope where conduct is sufficiently serious.
Yes. Serious or repeated bullying, harassment, discrimination, and similar behaviour may constitute non-financial misconduct.
When assessing concerns, firms should consider the frequency, severity, impact on recipients, and broader effect on workplace culture.
Behaviour most likely to trigger regulatory concerns includes:
The FCA is generally more concerned with serious, repeated, or intentional misconduct than isolated minor incidents.
Assessment should consider:
Many firms benefit from developing scenario-based guidance that illustrates where acceptable behaviour ends and misconduct begins.
Yes. Senior leaders and managers are typically held to higher standards because they influence culture and set behavioural expectations.
Where senior individuals engage in misconduct, firms may conclude that more serious disciplinary or regulatory consequences are appropriate.
Managers should:
Managers who fail to act appropriately may themselves create conduct and governance risks.
Substantiated findings may be relevant when assessing:
Firms should ensure fit-and-proper assessments include consideration of relevant misconduct findings and supporting evidence.
Potentially, yes.
Where FCA rules require disclosure, serious or repeated misconduct findings relating to certified staff or Senior Managers may need to be considered when preparing regulatory references.
Firms should apply a clear and documented approach when making these decisions.
Firms should maintain:
Documentation should be reviewed regularly and communicated clearly to staff.
Where internal independence is difficult, firms should consider using an external HR, legal, or compliance specialist.
A fair investigation typically includes:
Maintaining an audit trail is critical.
A documented framework should provide a range of responses depending on severity.
Possible outcomes include:
Consistency is essential to maintaining credibility and fairness.
An effective framework should provide:
Firms should periodically test reporting mechanisms to ensure they remain effective.
The strongest approach combines fair treatment of individuals with consistent enforcement of standards.
This means gathering evidence carefully, avoiding premature conclusions, supporting those involved, and ensuring outcomes align with both regulatory requirements and employment law obligations.
Training should cover:
Training records, completion data, and assessment results should be retained for audit and assurance purposes.
Compliance platforms can help firms:
One example is Skillcast's Core Compliance platform, which provides a compliance training portal, FCA-focused learning content, reporting capabilities, and record-keeping tools designed to support firms meeting regulatory expectations.
Before the new expectations take effect, firms should:
Provide practical examples of acceptable and unacceptable conduct.
Review Conduct Rules, grievance, disciplinary, and investigation procedures.
Ensure employees have safe and effective reporting channels.
Deliver role-specific training and maintain records.
Create documented and proportionate disciplinary responses.
Identify internal or external investigators and establish protocols.
Ensure NFM findings feed into fit-and-proper assessments and regulatory reference decisions.