FCA finalises non-financial misconduct guidance and confirms September 2026 implementation

The FCA has published Policy Statement PS25/23, finalising its handbook guidance on non-financial misconduct ("NFM") following its consultation on CP25/18. Feedback was overwhelmingly positive, with 95% of the 79 respondents asking for the additional guidance. The FCA is proceeding with its guidance largely as proposed, with some refinements in response to industry feedback.

The guidance is intended to support firms in assessing (i) when work-related NFM, such as bullying or harassment, will breach COCON and (ii) how NFM outside of work might be relevant to an assessment of fitness and propriety. 

Firms now have eight months to prepare. Both this guidance, and amendments to COCON broadening the scope of the conduct rules for non-banks to cover NFM, take effect on 1 September 2026. The guidance will not apply retrospectively.

COCON guidance

Alignment with employment law and terminology: The FCA has revised the guidance to further align with employment and equality law where possible, including an example demonstrating that the purpose of conduct is as important as its effect. The FCA uses 'bullying' and 'harassment' as shorthand terms to describe unwanted conduct that violates a colleague's dignity or creates an intimidating, hostile, degrading, humiliating or offensive environment. The FCA has resisted calls to define NFM more narrowly, maintaining a broad definition encompassing any misconduct not of a clearly financial nature. 

Boundary between work and private life: The FCA clarifies that its guidance seeks to articulate scenarios in which conduct outside the workplace may be sufficiently closely connected to work that COCON is engaged, such as misconduct at training events, award ceremonies or workshops organised by clients. These examples were added in response to suggestions by respondents to earlier consultations. The FCA does not otherwise address the concern raised in more recent feedback that these examples extend the scope of COCON into private life.

Reasonable steps: Managers will not be held responsible for failing to prevent NFM if they could not reasonably have known about it, or if they did not have authority to act. Examples of reasonable steps in the guidance remain largely as consulted upon: intervening to stop inappropriate behaviour, taking complaints seriously and providing a safe environment for raising concerns. The risk of inconsistent approaches between firms here remains.

Serious misconduct: The FCA has not provided more guidance on the meaning of 'serious', considering that firms are best placed to assess this in individual cases. The seriousness threshold aligns with the Equality Act threshold for harassment. Minor incidents that do not have the purpose or effect described in the rule (e.g., 'violating dignity', 'degrading' or 'humiliating') will not breach FCA rules.

FIT guidance

Conduct in private and personal life: Firms are not expected to investigate trivial or implausible allegations about an individual's private life. Conduct in private life is relevant to fitness and propriety if it presents a material risk that the individual will breach regulatory standards – a ‘material’ risk is one that is more than simply remote or speculative.

Social media: The FCA confirmed that firms do not need to proactively monitor employees' social media accounts. Social media activity will be relevant if it indicates a material risk of breaching regulatory standards, such as threats of violence, criminal activities, or conduct demonstrating a material risk of workplace bullying or harassment. Individuals may lawfully express controversial views on social media without calling their fitness into question, though such views may be relevant if there is a material risk of them being repeated at work in breach of conduct rules.

Repeated minor breaches: Following feedback, the FCA has removed repeated minor driving offences as an example of where an accumulation of minor breaches of the law might be relevant to fitness and propriety.

Regulatory references: Serious and substantiated cases of poor personal behaviour will have to be shared in regulatory references from September 2026. The FCA has not provided further guidance on addressing allegations or investigations into NFM in regulatory references, particularly where investigations proved inconclusive. This remains an area requiring careful judgement.

Limitations of guidance and the need for judgement

Despite requests from industry, the FCA is not providing additional case studies. It maintains that each case of NFM is unique, so providing extensive examples could undermine the fact-specific judgement firms need to exercise in individual cases. Whilst the finalised guidance represents a step forward, significant judgement calls will remain necessary.

Next steps

This publication concludes the FCA's policy work on NFM – it will now focus on how firms are tackling this in practice through its supervisory work. 

All firms affected should familiarise themselves with the new guidance. Firms have a duty under section 64B FSMA to notify conduct rules staff about the rules and ensure they understand how the rules apply. With eight months until implementation, firms should consider what updates to policies, procedures and training might now be necessary.