Authorities dismiss 12 employees for misbehavior during firm scrutiny campaign
The Financial Conduct Authority (FCA) is taking a decisive step towards a more comprehensive and consistent stance on misconduct that undermines trust and culture in financial services. The regulatory body has announced plans to tighten the regulatory environment around non-financial misconduct (NFM), imposing broader obligations on a wider range of firms and personnel, enhancing enforcement mechanisms, and providing guidance to ensure consistent implementation and assessment of fitness and propriety.
Over the past few years, rising levels of financial crime, fraud, and risks have made enforcing the highest standards of compliance a top priority for both watchdogs and businesses alike. In light of these concerns, the FCA has been working diligently to expand and harmonize its regulatory framework across the sector.
From September 2026, the FCA's conduct rules, previously more applicable to banks, will also extend to approximately 37,000 non-bank firms such as asset managers. This move aims to drive consistency across the financial sector and make it clearer when NFM can be a breach of their rules.
The FCA's efforts will reach more individuals in the financial services sector, including those who were previously outside the scope, subjecting them to enforcement related to NFM under these updated rules. The regulatory body has also launched a consultation, proposing new sourcebook guidance to help firms apply the rules and the Fit and Proper Test to NFM issues.
The FCA recognises that NFM incidents such as bullying or harassment are indicative of deeper cultural failings within firms. Addressing these issues helps promote a healthier workplace culture and better consumer outcomes. The regulatory body has updated its Handbook to reflect these new rules, consolidating the changes into the regulatory framework.
In recent times, the FCA has had to discipline nearly 40 members of staff for misconduct between 2022 and 2024. The decision to clamp down on NFM came after the FCA initially paused plans to regulate NFM when they scrapped DEI targets earlier this year. The move was welcomed across the City, as it was feared it would impose unwarranted costs onto firms.
However, not everyone has welcomed the changes. Shadow business secretary Andrew Griffith described the new rules as "grade A mission creep". Despite this, Jason Kurtz, chief executive of software firm Baware, emphasized that organizations tasked with upholding industry standards cannot afford to compromise when dealing with incidents of misconduct.
Sarah Pritchard, deputy chief executive of the FCA, stated that failure to address toxic behaviours can drive away good people, prevent staff from speaking up, and undermine performance. The FCA's new approach represents a significant step towards a more comprehensive and consistent stance on misconduct that undermines trust and culture in financial services.
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