The Financial Conduct Authority (FCA) is set to introduce new rules on non-financial misconduct from 1 September 2026, reinforcing its focus on workplace culture, accountability and overall behavioural standards across the financial services sector. While not a wholesale shift in policy, the changes clarify expectations, signalling a more proactive and assertive approach to enforcement.
Historically, there has been uncertainty about how far the FCA’s remit extends beyond strictly regulated activities. In particular, questions have arisen as to whether conduct outside the workplace can fall within its scope. That issue is currently being tested in ongoing litigation involving hedge fund founder Crispin Odey, who disputes the FCA’s jurisdiction over actions taken in his capacity as a business owner.
Against this backdrop, political and regulatory pressure has intensified. Following Parliament’s 2024 “Sexism in the City” inquiry, the FCA has moved to remove ambiguity by setting more transparent boundaries around acceptable conduct.
The updated framework confirms that purely private behaviour will not automatically trigger regulatory action. However, personal conduct may still be relevant when assessing whether an individual is fit and proper to work in the industry. Firms are not expected to monitor employees’ private lives, but where concerns arise, they must respond appropriately and investigate where necessary.
A key development is the FCA’s heightened emphasis on workplace culture and conduct. Serious bullying or harassment is now more likely to be treated as a breach of the obligation to act with integrity, potentially leading to regulatory sanctions as well as internal disciplinary action. The message is clear: behaviour once dismissed as part of a “high-pressure environment” will no longer be tolerated.
The rules also place greater responsibility on managers. Those in leadership positions are expected to take reasonable steps to prevent misconduct within their teams. Failure to do so could result in personal liability under the Conduct Rules, particularly where there has been a lack of oversight or intervention.
These expectations align with broader employment law developments in the UK, including the duty on employers to prevent sexual harassment, which is expanding to cover third-party conduct. For many firms, the FCA’s changes will reinforce the need to revisit internal policies, strengthen training programmes and enhance reporting mechanisms.
Despite the added clarity, difficult judgement calls remain. Distinguishing between robust management and inappropriate behaviour, or determining when conduct falls within a professional context, will not always be straightforward. Firms will need to adopt practical, case-by-case approaches supported by clear governance frameworks.
Overall, the direction of travel is unmistakable. Non-financial misconduct is now firmly within the FCA’s supervisory agenda, and firms that fail to address cultural and behavioural risks may face both regulatory and legal consequences.
Gray Smith
