Serious bullying and harassment in financial firms qualify as misconduct, under rules confirmed by the Financial Conduct Authority (FCA).
Previously, it was often unclear when these types of behaviours would amount to a conduct rules breach in a firm other than a bank.
On 1 September 2026, the same rules will be extended to around 37,000 other regulated firms, increasing consistency across financial services.
There was widespread support for the FCA extending these rules in response to its previous consultation.
Serious, substantiated cases of poor personal behaviour will also need to be shared through regulatory references, in the same way financial misconduct currently is, making it harder for individuals to avoid consequences by moving from firm to firm.
Sarah Pritchard, the FCA’s deputy chief executive, said:
‘Too often when we see problems in the market, there are cultural failings in firms. Behaviour like bullying or harassment going unchallenged is one of the reddest flags – a culture where this occurs can raise questions about a firm’s decision making and risk management. Our new rules will help drive consistency across industry and support the vast majority of firms that want to do the right thing to deepen trust in financial services.’
The FCA is also asking whether further guidance would be helpful and proportionate for firms as they implement the rule change. It has taken on board feedback on its previous draft guidance.
The draft guidance covers how firms should consider non-financial misconduct when assessing whether an individual is fit and proper to work in financial services. This includes how firms should consider use of social media and the relevance of behaviour in private and personal life.
The FCA has already decided not to proceed with guidance which is not necessary to achieve its aims.
It is also not seeking to duplicate existing legal obligations on firms under the Equality Act and the recent preventative duty to protect workers from sexual harassment.
The guidance is open for consultation until 10 September 2025. The FCA will only proceed with the guidance if there is clear support for it.
Sophie White, Partner in the Employment, Labour and Pensions group at Eversheds Sutherland has shared her response to the FCA’s policy statement on non-financial misconduct saying:
“The FCA has finally published its long-awaited next steps on non-financial misconduct (NFM) and is amending the scope of COCON for non-banks (to align with requirements on banks) and consulting again on proposed Handbook guidance.
“The COCON 1 guidance centres on bullying, harassment and violence against colleagues. Helpful guidance on how to determine if the behaviour in question is serious or relates to professional life remains. Whilst some of the difficult grey areas from the 2023 consultation paper have been resolved, there continue to be a number of areas which are open to interpretation and risk inconsistent application. This will include allegations of “bullying”, which is a key area of focus but a term that is not defined in employment law.
“The COCON 2 guidance makes clear that managers who witness acts of non-financial misconduct, or who receive allegations of such conduct and fail to deal with them appropriately, could themselves be in breach of COCON 2.
“Proposed guidance on FIT is less extensive but, for example, makes clear that if an individual has been asked to resign in circumstances where they are involved in misconduct such as bullying, harassment or discrimination this will be considered by FCA in their determination of fitness and propriety. Also included is guidance on when social media activity will be relevant to an individual’s fitness and propriety.
“Firms will have until September 2026 to amend policies and procedures and the FCA is clear that the rules will not apply retrospectively. However, firms remain under a duty to notify conduct rules staff about these new rules and make sure they understand how they apply to them – typically this is effectively achieved through tailored training.
“Finally, getting some certainty on this difficult subject will be welcome news for FS employers. Moving forward, firms will need to review their existing policies and processes which concern detection and management of potential COCON breaches, as well as their existing fitness and propriety assessment processes, to ensure compliance and foster a culture of integrity and accountability. Firms will also want to consider, design and start to implement required training for conduct rule staff. As the FCA’s stance on non-financial misconduct is now beyond doubt, firms would be advised to progress such activity immediately.“
