The UK Financial Conduct Authority (FCA)’s new rules and guidance on non-financial misconduct (NFM) will take effect on 1 September 2026. This is an important development for firms subject to these new provisions, namely firms subject to the Senior Managers and Certification Regime (SMCR)[1].
These reforms are part of the FCA’s wider cultural agenda, emphasising healthy “speak‑up” cultures, robust handling of bullying and harassment, and clearer expectations on conduct both inside and (in some cases) outside the workplace. They also reflect the FCA’s response to long-standing ambiguity in how NFM interacts with regulatory standards, including the difficulties highlighted in cases such as FCA v Frensham [2021] UKUT 0222 (TCC) and in the 2024 UK Parliament’s “Sexism in the City” report.
Aside from the intended cultural shift the FCA hope to achieve with these reforms, how might impacted firms wish to prepare for NFM? This GT blog post outlines three strategies firms may wish to consider ahead of September.
1. Understand the New Rules and Guidance on NFM
There is a common misconception that the new rules and guidance on NFM apply only to the most extreme, newsworthy, and uncommon types of misconduct, such as those involving Crispin Odey. While it is true that the conduct in question must reach a certain threshold of severity, in fact, these provisions are detailed, far‑reaching, and expressly cover serious bullying, harassment, and violence towards colleagues, including conduct that violates dignity or creates an intimidating, hostile, degrading, humiliating, or offensive environment.
Before September, stakeholders must properly understand the forthcoming changes. Accordingly, impacted companies should consider providing education for at least HR functions, legal functions, disciplinary and conduct committees, and management at all levels. There are three reasons:
- First, we may see an increase in reference to NFM allegations as part of whistleblowing incidents and other complaints and disciplinaries. These allegations would need to be understood and appropriately handled as potential breaches of:
- individual conduct requirements (the FCA’s Code of Conduct (COCON)), which from September 2026 will explicitly capture serious bullying, harassment, and violence;
- fitness and propriety requirements (FIT), which have a broader reach than COCON and may include misconduct which forms part of an individual’s private life, where it demonstrates a material risk to regulatory standards (for example dishonesty, abuse of trust, serious criminal offences, or conduct undermining public confidence);
- firm-level requirements, including suitability of systems and controls (for example, in respect of onboarding new employees, references, and speak-up arrangements), potentially necessitating a regulatory notification.
- Second, an erroneous application of the NFM provisions (for example, a conduct committee reaching an incorrect conclusion that conduct is not within scope of COCON), might increase employment litigation risk. This risk may be further heightened by the upcoming changes under the UK’s Employment Rights Act 2025 (ERA), which will introduce two material shifts in unfair‑dismissal protection: (i) reducing the qualifying service requirement from two years to six months; and (ii) removing the statutory compensatory cap (currently £118,223). These changes mean that a wider group of employees may be able to bring unfair‑dismissal claims arising from NFM‑related disciplinary outcomes.
As compensation will become uncapped under the ERA, employees may be able to claim not only financial losses but also losses linked to career trajectory, regulatory standing, or future employment prospects where an NFM‑related finding renders their position untenable.
- Third, the new NFM rules will require all managers (even if not senior managers) to take reasonable steps to protect staff under their responsibility from NFM or risk an adverse COCON finding. The FCA’s guidance makes clear that failing to intervene, failing to operate policies appropriately, or mishandling complaints may constitute a breach of Conduct Rule 2 (skill, care, and diligence). This includes circumstances where managers “should have known” about misconduct or failed to maintain appropriate standards within their teams.
Impacted firms should consider implementing a documented programme of education and continuing education. The new rules and guidance are detailed, and it may not be necessary for all employees to maintain the same level of understanding.
2. Properly Embed the Changes
The new rules and guidance will impact a variety of policies and processes. The FCA will expect to see appropriate changes made to written materials and will mandate that these changes be applied in practice. The FCA will further require that firm management tests and oversees these processes.
Potentially impacted areas include FIT assessments as part of onboarding process for new certified staff and senior managers; annual certification processes; internal conduct policies; training and competence; conduct/disciplinary related processes; regulatory references and regulatory notifications; and social media and IT‑use policies.
Firms should consider requiring their senior managers to oversee these processes, and accordingly, should consider providing adequate management information targeted at proper NFM compliance.
3. Regulatory Scrutiny May Arise
The FCA has emphasised its intention to allow firms some latitude in implementing these new rules and guidance. However, these are important flagship reforms, and therefore, the regulator may focus on NFM as part of its supervisory interactions with firms — especially firms with historic issues, poor reputations, or those that make repeated notifications.
As such, the FCA may use its supervisory tools (for example skilled person reviews) and may engage in enforcement actions.
Conclusion
With the 1 September 2026 implementation date approaching, firms should consider confirming that their people, processes, and governance structures are ready for the enhanced expectations around NFM. This may include ensuring consistent decision‑making, creating pathways for clear documentation, ensuring effective escalation routes, and verifying the presence of well‑trained managers. Embedding these changes early will not only support regulatory compliance but should also contribute to healthier and more resilient workplace cultures.
