Financial regulatory body, FCA, sets out clear guidelines on ethical behavior outside of financial transactions, aiming for consistency in conduct standards within the financial services sector.
The Financial Conduct Authority (FCA) has announced a significant shift in its approach to non-financial misconduct, such as bullying, harassment, and discrimination, in the financial services sector. This new focus, outlined in a consultation paper titled "Diversity and Inclusion in the Financial Sector - Working Together to Drive Change," aims to create a more accountable and inclusive industry [1].
## Impact on the Financial Services Sector
The FCA's updated Code of Conduct (COCON) will soon include specific rules against workplace misconduct, aiming to establish a robust framework for addressing these issues [3]. From September 1, 2026, these rules will apply not only to banks but also to non-banking firms, ensuring consistency across the financial sector [5].
The new rules are designed to give firms the confidence to take robust action against serious misconduct, promoting a culture where such behaviour is not tolerated [5]. A culture survey conducted by the FCA in October 2024 revealed a 60% increase in reported incidents of bullying, harassment, and discrimination among regulated firms over a three-year period, underscoring the need for these changes [2].
## Measures to Combat Toxic Workplace Cultures
The FCA is consulting on draft guidance related to COCON and the Fit and Proper Test for Employees and Senior Personnel (FIT). This consultation aims to ensure that the new rules are effectively implemented and understood across the sector [3]. Industry support for these changes has been strong, indicating a shared commitment to addressing non-financial misconduct and promoting healthier workplace environments [3].
## Key Provisions
The term "serious" in the updated framework will align closely with the provisions of the Equality Act 2010, which prohibits harassment and discrimination [4]. Incidents of unwanted behavior that violate an individual's dignity or create a hostile, degrading, humiliating, or offensive environment are likely to fall under the scope of the framework [4].
The regulatory framework for non-financial misconduct will extend to approximately 37,000 additional regulated firms as of 1 September 2026 [5]. Firms are encouraged to have in place clear, comprehensive zero-tolerance policies, accountable reporting mechanisms, transparent investigative procedures, and consistent disciplinary measures [5].
The FCA's efforts aim to combat toxic workplace cultures through the creation of a clear and consistent framework for addressing inappropriate conduct, empowering victims to raise concerns without fear of victimization or reprisal [5]. FCA Deputy Chief Executive, Sarah Pritchard, stated that non-financial misconduct going unchallenged is a clear warning sign of a failing culture [6].
## Looking Ahead
The updated guidance on non-financial misconduct remains open for consultation until 10 September 2025 [1]. The FCA's broader strategy includes promoting healthy and inclusive workplace cultures, which is crucial for deepening trust in financial services [5]. By addressing bullying, harassment, and other forms of misconduct, the FCA aims to foster environments that are respectful and conducive to trust.
- The Financial Conduct Authority's (FCA) updated approach to non-financial misconduct, such as bullying, harassment, and discrimination, in the financial services sector could have significant implications for the wealth management industry, as the updated Code of Conduct (COCON) will apply not only to banks but also to non-banking firms, starting from September 1, 2026.
- As the FCA's updated framework aligns closely with the provisions of the Equality Act 2010, it may prompt changes in the fintech sector, with firms being encouraged to have clear, comprehensive zero-tolerance policies towards unwanted behavior that violates an individual's dignity or creates a hostile work environment.
- The regulation of non-financial misconduct in the financial services sector, such as bullying and harassment, could potentially lead to a shift in the business culture within the finance industry, promoting a more accountable and inclusive environment, as firms are encouraged to address these issues robustly and foster healthier workplace environments.
