Non-financial misconduct (NFM) refers to serious bullying, harassment and violence committed by or against individuals in a regulated financial services firm. It is distinguished from the financial and market-conduct misconduct that the FCA’s rules have historically focused on, but from 1 September 2026 it sits squarely within the regulatory framework.
The regulatory basis: COCON 1.1.7FR
FCA Policy Statement PS25/23, published 12 December 2025, introduced COCON 1.1.7FR, a new rule in the FCA’s Code of Conduct sourcebook that extends COCON’s scope to cover serious NFM at all FSMA Part 4A firms. Before this change, COCON’s coverage of NFM was clearer for banks than for FCA solo-regulated firms. From 1 September 2026, the position is uniform across all SMCR firms.
The conduct must be “serious” to fall within COCON 1.1.7FR. Minor or trivial interpersonal friction is not in scope. The scope test is two-limbed: conduct is covered if either the person carrying out the conduct or the subject of it deals with the financial services business of the firm. Only where both individuals work in entirely separate functions unconnected to the firm’s financial services operations does the conduct fall outside scope.
Conduct Rules implications
Two Individual Conduct Rules are directly engaged:
- Individual Conduct Rule 1 (act with integrity): serious NFM, whether bullying, harassment or violence, is incompatible with acting with integrity in the context of regulated activities.
- Individual Conduct Rule 2 (act with due skill, care and diligence): creating or tolerating an environment of NFM is inconsistent with the care and diligence standard.
For Senior Managers, Conduct Rule SC4 creates a disclosure obligation: Senior Managers must disclose private-life conduct that is material to an assessment of their fitness and propriety, including NFM findings.
Fitness and propriety link
PS25/23 also amends the FIT sourcebook to clarify that serious NFM is relevant to the honesty, integrity and reputation element of the fit and proper test. Firms conducting annual certification of Certified Persons and Senior Managers must factor NFM matters into their fitness and propriety assessments.
Training implications
All SMCR firms must update their COCON and Conduct Rules training before 1 September 2026. The training has two layers: all-staff awareness of the expanded Conduct Rules scope, and targeted training for Senior Managers and HR and compliance functions on NFM assessment and reasonable steps. See our full guide to FCA non-financial misconduct training 2026.