HR should ‘rethink’ training under FCA’s new conduct rules

From 1 September 2026, serious behavioural misconduct such as bullying and harassment will fall within the FCA’s Conduct Rules. The scope of those rules is also widening significantly, extending to an additional 37,000 solo-regulated firms. That marks a major shift. What might once have been treated purely as an HR matter will now have regulatory consequences and for managers and certified staff in particular, that raises the stakes. The message from the FCA is clear: this isn’t just about ticking a training box. It’s about culture, accountability, and how firms respond when issues arise. We’ll consider that.

Historically, some firms have managed these cases quietly, through settlement agreements and non-disclosure clauses, and hoped the issue doesn’t resurface. But that approach won’t hold up under the new regime. NDAs are being restricted, regulatory references will have to reflect misconduct, and the old practice of letting perpetrators move on without consequence is no longer viable.
For HR, that changes the dynamic. Managers need to treat serious misconduct as a regulatory risk,  just like they would poor financial controls or a breakdown in due diligence. As Head of Client Training, Trish Embley, told this programme last week, firms should be investing now in joined-up, scenario-based training that helps managers navigate difficult judgment calls, especially in those grey areas where the line between personal behaviour and professional standards starts to blur.

So what exactly are the expectations on staff, and how do you bring them on board, especially where there’s scepticism or pushback? Trish Embley again:

Trish Embley: “Well, I mean, obviously the key thing is for all of those covered by the conduct rules, what are the expectations of the organisation? Now, this is always a bit of a battle for hearts and minds. Some people really engage naturally, others are a little ‘oh, this all a bit of political correctness.’ I think historically with these sorts of topics, bullying and harassment, the main risk is that the individual brings a claim and there's a tribunal but I think, unfortunately, there can sometimes be a culture of well we'll ‘settlement agreement out’ the victim and maybe the perpetrator will move on. Now for a number of reasons that's not going to carry on any longer. For one thing, we've got new rules about non-disclosure agreements in settlement agreements being prohibited but also this requirement that that would go in the regulatory reference. So this idea that these incidents of bullying and harassment can just move around the sector, going from job to job, or it never really comes out, that's going to completely go. So I think that's the point. Why should the audience be listening in this training? Why does this affect me? I'll just carry on. I make loads of money in this business; I'll just carry on behaving the way I want to behave because I'm kind of Teflon coated because of all the money I bring in. I think that's a key point that's got to come across, certainly with all staff who are subject to conduct rules. For the managers, it's got to be really promoting this idea that you can't just respond anymore, this is such a significant risk, and now it's a regulatory issue you've got to look out for this and address it as you would anything to do with skill, care, due diligence. If you think somebody was doing something risky, you wouldn't just wait until there was a complaint. You would take action very, very early on.”

Joe Glavina: ““For HR teams listening to this, the natural next step is to think about training but this isn’t something HR should be doing on their own is it?” 

Trish Embley: “Oh, absolutely, and more and more, we're finding that in a number of sectors we're speaking to different experts. It's a multidisciplinary team that approach this and sometimes multi-disciplinary panels as well, where you might have somebody from Legal, somebody from HR, someone from Risk and Compliance. I know we've got a little while before this comes in on 1 September 2026 but it takes time to get that sort of system network going and to decide on what the approach is going to be, so that the first time you do have an issue you are ready to go, and the process is in place.”

Joe Glavina: “There so seem to be quite a lot of grey areas around this. So, whether conduct falls within work, outside of work. It’s a tricky one for HR, isn't it?"

Trish Embley: “Yes it is and I think you've pinpointed there one of the key issues that should be covered in this very much scenario-based training because there's a couple of judgment calls that have to be made here that aren't easy, like, what is serious bullying and harassment? So bullying and harassment can often be on a spectrum. We see grievances where a manager has perhaps not communicated in the right way and there’s an area of development there in their communication skills to the downright, abusive behaviour. So again, who is going to make that judgment call? What are the factors it is going to be based on, and how are we going to make sure that all these different parties, HR, Compliance, Legal, take the same view? The other one is, of course, that although everybody who's covered by the conduct rules must make sure that they don't conduct themselves in a way that could be bullying or harassment in the workplace, for the more senior managers this leads into their fitness and proper test and what's clear from the FCA is that can include conduct and behaviours outside work, but associated with the workplace. Now that's always a bit of a tricky area because if you take the, oh, we all spill out into the pub after work on Friday -  and I know in the FS sector it's very, very sociable - at what point does that move from being a sort of work related event as the hours go by, to the purely social and nothing at all to do with work? So a lot of nuances, a lot of grey, a lot of guidance needed in the training that would be delivered on this topic.”

The consultation paper ‘Tackling non-financial misconduct in financial services’ 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