December 11, 2023

Not so 'plain and simple': the new draft FCA rules for non-financial misconduct


In 2018, the UK's Financial Conduct Authority ("FCA") stated publicly that "non-financial misconduct is misconduct, plain and simple", emphasising their view that the Conduct Rules applicable to most employees within regulated firms did not require amendment to bring behaviours such as bullying and harassment within their scope. Five years on, the FCA is proposing to amend the Conduct Rules to include explicitly such behaviour.

The FCA, together with the Prudential Regulation Authority ("PRA"), have recently published consultation papers on diversity and inclusion in the financial sector. The regulators' draft proposals, which are currently being consulted upon by industry stakeholders and which would be expected to come into force in 2025, include requirements on firms (dependent on their size and scope) to develop and publish diversity strategies, to monitor and report on staff demographics and to set diversity targets (see our prior update for a wider discussion on key questions around the consultation, the link to which can be found at the end of this article).

In addition, the FCA proposes to amend its Code of Conduct source book ("COCON") expressly to include non-financial misconduct ("NFM") such as serious instances of bullying and harassment (including sexual harassment) and to provide guidance on what types of behaviour would fall within the newly expanded scope and what would not. 

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