Firms at risk of underestimating FCA’s new non-financial mis-conduct rules

With the FCA’s new non-financial misconduct rules taking effect in September 2026, our research – in partnership with Mishcon de Reya – shows firms are divided on what the changes will mean for them. And with less with less than 1 in 10 having experience in dealing with misconduct, too many firms are at risk of being caught off guard.

How are firms readying themselves for the new rules?

From September 1, 2026, the FCA's conduct rules will be extended to approximately 37,000 non-bank firms, requiring them to treat NFM with the same seriousness as financial misconduct. The regulator will also require firms to disclose serious, substantiated instances of NFM in regulatory references, making it more difficult for individuals to move between firms to avoid consequences.

According to our survey, two thirds of firms (65%) reported they had already started preparing for the new rules or planned to start early in the new year.  These firms have told us that getting started early allows ample time to prepare, given that the new rules impact both compliance and people-related processes, as well as a variety of systems that support those processes. 

25% of firms stated they hadn’t yet figured out when they would be implementing the rules or would wait until Q3 2026 to get things started.  For these firms, it could mean they have just a few short months to identify the changes needed and implement these ahead of the regulatory deadline.

Why is Non-Financial Misconduct a regulatory priority?

Many have asked why the FCA, whose job is to protect customers and the financial system, should care about things like workplace bullying and harassment, let alone personal behaviour outside of work. 

Historically, the focus on individual misconduct was financial risk management, and centred on things like fraud and market abuse.  But with these new rules, the FCA has deliberately sought to broaden the scope beyond risk management and compliance, to look at how staff conduct themselves generally, and the implications this has for overall business culture.  The suggestion is that firms that tolerate objectionable staff behaviour are more likely to mistreat customers or mismanage risk.

The FCA has also clarified its view that objectionable staff behaviour, both inside and outside work, could imply they are no longer “fit and proper” - a prerequisite for staff that hold senior manager or certified roles.  This would be especially true where the conduct shows a disregard for ethical or legal obligations or undermines public confidence.

Is this really a big deal?

Misconduct of any type is clearly a significant HR concern, and one which most businesses look to deal with already, but the new rules make it clear that non-financial misconduct is also a regulatory issue. Many firms think that the new rules will require not more than a tweaking of policies and procedures, and occasional reporting to the FCA.  Our research found that 77% of firms think the new rules will have limited impact on the business. 

But some have raised concerns that firms may be underestimating the implications of the new rules, and that more time and effort will be needed to implement changes and manage the ongoing processes required.  

Fewer than 7% of firms reported any substantive experience of managing instances of staff misconduct. Firms with experience in managing non-financial misconduct, know the true cost, both in time, resources and management attention needed to investigate and remediate the issue.  And even for these firms, many now realise that more will need to be done to identify misconduct. 

You don’t know what you don’t know

The FCA’s new standards increase the burden on firms to identify, investigate and remedy misconduct, and document the processes along the way.  For those who have had little to no (known) incidents of misconduct, the implications of the rules appear banal.  In this case, past performance is most certainly not a reliable indicator of future performance.

Taking things seriously

As we reviewed the research with Mishcon de Reya, who have extensive experience of working with clients day to day on these issues,  it’s clear how much care and attention is required to effectively manage even one instance of misconduct. 

“The new rules are the culmination of a lot of work by the FCA over recent years, and they will expect firms to take it seriously. That will involve firms thinking about how best to integrate the new rules into existing policies and procedures, and the extent to which any changes need to be made to existing frameworks around how to mitigate, escalate and appropriately investigate non-financial misconduct. Investigating and managing known instances is never just about compliance. Each case carries the risk of regulatory scrutiny, reputational damage, and operational disruption. The real effort lies in ensuring every step is documented, defensible, and proportionate to the risk involved. Cutting corners - whether on evidence gathering or remediation - can expose the business to far greater liabilities down the line.”
- Elizabeth Hope

When looked at through this lens, it becomes clear that firms may have more work on their hands than they might expect.  Which firms can confidently say they have the experience across the board, from identification to investigation and reporting, to know how best to meet the FCA’s demands? 

Our concern is that too many may be caught out unwittingly.

Building on our survey, we hosted a webinar, attended by more than 180 firms, to discuss the challenges with implementing and complying with the new NFM rules, and how firms might address these. If you're interested in the webinar's insights, see the recording here. Attendees were asked how confident they were in their preparations, with 84% saying they’d need external support to get them over the line.  For some, this may be a simple readiness check to ensure they have processes in place and policies are up to date. But we suspect that the most valuable preparation is just knowing who to call if the need arises for an independent expert.