FCA confirms misconduct to be a regulatory issue with sharper training expected

The FCA has announced that from 1 September 2026, serious bullying, harassment, and similar behaviour will fall squarely under the FCA’s Conduct Rules and for the first time, the rules will apply to around 37,000 non-bank firms regulated by the FCA. The change means that serious non-financial misconduct, including conduct outside the workplace where there’s a clear link to someone’s role, can now be treated as a regulatory issue.

This is significant. It puts serious behavioural misconduct on the same footing as financial misconduct when it comes to assessing someone’s fitness to work in financial services. And that, says the FCA, has implications for how firms manage misconduct, escalate concerns and,  importantly, how they train their staff. That’s something we’ll explore with our Head of Client Training, Trish Embley.
This all stems from the FCA’s most recent consultation paper, ‘Tackling non-financial misconduct in financial services,’ published earlier this month. The FCA makes it clear that firms must ensure staff understand how the Conduct Rules apply to serious instances of bullying, harassment, and similar behaviour. That means reviewing existing training and, where needed, developing something sharper and more joined-up across HR, Legal and Compliance.

The extension of the FCA’s Conduct Rules to tens of thousands of non-bank firms marks a cultural shift as well as a regulatory one. For the first time, poor personal behaviour that meets a threshold of seriousness may need to be reported to the regulator and referenced in future employment decisions. And this applies not only to incidents that happen in the workplace, but also those which happen outside work where the impact or association is clear.

That has huge implications for firms, especially for their line managers and HR teams because they’re the ones most likely to spot an issue first. As a result, firms are under pressure to tighten up their internal systems, including how they train people to recognise when misconduct isn’t just an HR issue, but a regulatory one.

So what should that training now look like in practice? Earlier I caught up with our Head of Client Training, Trish Embley. I put it to Trish that for most firms the type of training they offer will need to change:

Trish Embley: “Yes that’s right. I think it’s the quality of the training that needs to be explored. If we think historically about compliance training, money laundering etcetera, a lot of that is done by the sort of click, click, click through e learning whereas because this is more to do with what's at the heart of this requirement for training which is cultural change, and behavioural change. That's not going to be achieved successfully, we believe, through your traditional e learning. So what the FCA are looking for is the sort of training that involves scenarios where people have got to make difficult judgment calls, tricky decisions, case studies, and there's a mention of role play as well which I know a lot of people don't like because they don't like acting but that's where, when traditionally we have done this sort of training, we can involve actors and then all the manager or the employee attending has to do is be themselves and respond in a way that they would in a workplace.”

Joe Glavina: “It sounds like this is not only about staff behaving properly, Trish, but also about spotting issues and knowing what to do. Is that right?” 

Trish Embley: “Yes, it is really. They are driving home the point that many of these organisations will be running DEI initiatives, running Respect at Work programmes. Some people engage with that more than others but they're really upping the ante here by saying, look, this behaviour is not just inappropriate and unacceptable in terms of our values and our respect to work policy, you are in breach of your regulator’s code of conduct. This is on the same sort of level as things like money laundering. So it's really driving home how serious this is and therefore how it should be prioritized in terms of managers, for example, preventing this happening, responding certainly to it, but really encouraging reporting as well as they would with any other regulatory issue.”

Joe Glavina: “A lot of managers might roll their eyes and think this is just HR going off on one, but this is potentially career limiting isn’t it?”

Trish Embley: “Oh, absolutely and that, I think, is something that needs to be really emphasised because, of course, it will be something that would be required to be reported in regulatory references. So, this can really affect someone's ongoing career. Also, we're putting this sort of training on a par with other qualification training that would have to be done, and there's have to be records showing that people have completed it, they'd been assessed and it's ongoing. It's an ongoing part of continuous professional development. So again, thinking about this sort of training the same way as you would have any other sort of qualification that you would have to complete in the FS sector.”

Joe Glavina: “This is coming into force next year on 1 September. Are there any actions that firms should be taking now ahead of those changes such as auditing training to see if it’s in line with what the FCA is expecting?”

Trish Embley: “Yes absolutely. Audit your existing training, see how it needs to be enhanced, or added to, and get that joined up approach. So it may be that whether it's the EDI team, or HR, they have operated this training in a silo, it's reaching out to Legal and Risk and Compliance to make sure, as I say, everybody's on the same page so you don't end up with, you know, different sort of HR disciplinary outcomes to a decision that, say, a Risk and Legal panel might make on the regulatory issues,” 

That consultation paper is called ‘Tackling non-financial misconduct in financial services’ and was published on 2 July and is available now on the FCA’s website. It sets out the final rules and draft guidance on how serious non-financial misconduct, including bullying, harassment, and violence, will be treated under the Conduct Rules from 1 September 2026.

The consultation remains open until 10 September 2025 and firms can submit responses online via the FCA’s website. So this is the window for HR, Legal and Compliance teams to review the proposals and put forward your views, especially on the draft guidance, which the FCA says it will only finalise if there is broad support. If you haven’t already, now is the time to check your internal processes, and if in doubt, respond to the consultation. We’ve included a link to the paper in the transcript of this programme for you.

LINKS
Link to FCA consultation paper CP25/18: Tackling non-financial misconduct in financial services