Introduction
From 1 September 2026, the FCA Code of Conduct (COCON) has been updated to require all non-bank SM&CR firms to take steps to prevent serious non-financial misconduct (NFM). This includes bullying, harassment, and violence against colleagues.
The FCA published the findings of an NFM survey in October 2024. It found that reported NFM incidents within regulated firms had risen from 1,363 in 2021 to 2,347 in 2023. Most of those incidents had been identified through grievances and a much smaller proportion through whistleblowing. Upon the publication of the survey results, Sarah Pritchard, the deputy chief executive at the FCA, commented that:
Healthy workplace cultures are essential across all the markets we regulate – where non-financial misconduct is allowed to persist it can undermine trust and confidence, and create a culture where wrongdoing goes unchallenged, causing harm.
The new rule can be seen as a direct FCA response to the growing prevalence of NFM complaints as well as an indicator of the FCA’s sharpened focus on workplace culture as a driver of decision-making.
What has changed?
The FCA has added a new rule to its Code of Conduct that has extended the scope of the Code to include non-bank SM&CR firms. This means that certain serious non-financial misconduct is now a regulatory concern for in-scope firms.
Examples of such misconduct include behaviour which violates an employee’s dignity, creates a hostile or degrading work environment or constitutes violence against an employee. Sexual harassment falls within the scope of NFM. The threshold for ‘serious’ misconduct under the new rule is aligned with the definition of harassment in the Equality Act 2010.
Banks and other dual-regulated firms have worked under wider conduct rules for years. This change brings other firms in line with the pre-existing regulations for banks. The new rule covers around 37,800 SM&CR firms, including asset managers, insurers, brokers, wealth managers and consumer credit firms.
What counts as non-financial misconduct?
The rule captures unwanted conduct towards a colleague that violates their dignity, or that creates an intimidating, hostile, degrading, humiliating or offensive environment. It also captures conduct that is violent. It does not, however, expand the scope of COCON to cover other forms of conduct prohibited by the Equality Act, such as discrimination and victimisation.
All staff already subject to the Conduct Rules are in scope of the new rule, which covers almost all employees. Additionally, certification staff and senior managers are included. Ancillary staff (for instance, reception staff, security, catering) whose roles could not affect regulatory obligations are excluded from the new rule.
Only serious misconduct falls within the ambit of the new rule. The FCA’s guidance sets out the factors that the regulator will consider in deciding whether conduct is serious enough to be caught by the new rule. These factors are:
- whether the conduct is repeated or part of a pattern.
- the duration of the conduct.
- the size of the impact on the subject of the conduct.
- the seniority of the person whose conduct is in question.
- the difference in seniority between the person whose conduct is in question and the subject of the conduct.
- mitigating and aggravating factors, even if they take place subsequently.
- whether the person whose conduct is in question has been warned or disciplines for similar misconduct by the firm, a previous employer, the police, or a regulator.
- whether the person whose conduct is in question has previously undertaken not to do the act or engage in the behaviour in question.
- whether the conduct is criminal or would justify dismissal.
Where sufficiently serious conduct is identified, it may amount to a breach of Individual Conduct Rule 1 (act with integrity) or 2 (act with due skill, care and diligence).
Poor behaviour that does not meet the threshold of seriousness is not a breach of the COCON. It may still be an internal disciplinary matter to be handled within the firm’s own HR procedures.
COCON applies only to work-related conduct. New FCA guidance works through examples. Misconduct on firm premises, while working remotely or at a firm event is in scope. Behaviour at a purely social occasion is not. However, a social event organised by a manager may be in scope, as direct reports could feel obliged to attend.
Whether conduct on social media is covered by the new rule depends on context. The FCA will look at whether a post targeted a colleague, whether the content was work-related and whether firm systems or devices were used. The FCA has confirmed that monitoring of employees’ private social media accounts is not a required step for compliance with the new rule.
How can structured eLearning help firms comply with the new rule?
Firms are already subject to a duty under section 64B of the Financial Services and Markets Act 2000 to ensure that Conduct Rules staff are notified of the rules which apply to them and to take reasonable steps to ensure those rules are understood. COCON requires suitable training which gives staff an awareness of all COCON rules as well as a ‘deeper understanding of the practical application’ of the rules relevant to the employee’s particular role.
It is in this arena that generic training tends to fail. It is essential to the new rule that staff understand where conduct crosses the line into serious NFM. The FCA’s survey findings illustrate this point: around 47% of bullying and harassment complaints were not upheld. Managers need to be able to assess incidents properly and understand when to escalate or report misconduct. Structured eLearning has a number of features which can give firms confidence that their staff adequately understand the COCON rules that apply to them, including:
- Scenario-based questions which test knowledge of the Conduct Rules in context.
- An audit trail that allows compliance teams to demonstrate to regulators that staff are appropriately trained.
The FCA is likely to take a tough stance on failures by firms to comply with their obligation to train staff appropriately on the new non-financial misconduct rules. In 2025, the FCA’s Chief Operating Officer, in stressing the need for tailored conduct training for all staff including senior management, made the point:
Culture drives conduct and decision-making, which directly impact outcomes for consumers, markets, and our economy. For this reason, culture will continue to be a regulatory concern.
CityLearning’s Senior Managers & Certification Regime (FCA Conduct Rules) and forthcoming Non-Financial Misconduct courses are practical, online training programmes designed to give staff a deep understanding of their obligations under the Conduct Rules and how these duties apply to their day-to-day work and real decisions. It provides staff with a solid grasp of what reasonable steps they must take and what individual accountability means for them in practice, through concise, scenario-based content. The course is built around measurable learning outcomes, and the CityREPORTS platform gives compliance teams a clear record of which staff have been trained. CityREPORTS allows firms to share training records with regulators in order to demonstrate that their staff have been provided with consistent, up-to-date training.
Explore our Senior Managers & Certification Regime (FCA Conduct Rules) and Non-Financial Misconduct course or contact us to see how CityLearning can help your firm stay abreast of new FCA rules.
