FCA Non-Financial Misconduct

The FCAs new rules on culture, conduct, and compliance

From 1 September 2026, the FCA will expand its rules on Non-Financial Misconduct (NFM). This will mean that serious behaviours such as bullying, harassment, discrimination and violence will be treated as a regulatory matter, not just an HR issue.

The new rules extend to over 37,000 regulated businesses, including hedge funds, pension providers, and insurers, raising the bar for the entire financial sector.

Additional FCA Non-Financial misconduct resources:

• FCA Non-Financial Misconduct: What you need to know
• FCA Non-Financial Misconduct Compliance Checklist
• Complete Guide to Navigating the FCA Non-Financial Misconduct Rules

What are the FCAs new Non-Financial Misconduct rules?

All incidents of ‘serious, unsubstantiated poor personal behaviour’ such as bullying and harassment, including misconduct that happens outside of work, will need to be reported to the FCA using the same process that currently applies to reporting financial misconduct.

NFM will become a breach of conduct rules and factor into an individual’s ‘fit and proper’ assessment with the aim of improving culture in the financial sector.

What could be considered Non-Financial Misconduct?

• Serious bullying and harassment
• Sexual harassment
• Discrimination
• Violence
• Criminal offences

Culture is now a compliance issue

The FCA have grown more concerned about persistent poor behaviour in the sector and the impact it has on consumer trust. They recognise the key role regulators must play in tackling poor behaviours such as harassment and sexual misconduct, emphasising that misconduct is a clear sign of cultural failing. It highlights a firm’s weak structure and governance and raises questions over their ability to effectively manage risk when poor behaviour is allowed to go unchecked.

The new NFM rules mark an important turning point for firms, emphasising that workplace culture including poor behaviour is now a compliance issue. The tightened regulatory framework will mean that NFM will come under more scrutiny than ever before.

Cultural blind spots will carry real regulatory consequences and boards, compliance teams and HR departments will be expected to take proactive steps to address risks across their organisation.

Why this matters to your organisation

The FCA has made it clear that culture now firmly sits within the compliance agenda, with the regulator expecting firms to evidence they are actively monitoring cultural health, preventing misconduct and holding individuals accountable.

Personal accountability for leaders and managers

Leaders and managers will be held personally accountable under the Senior Manager & Certification Regime (SM & CR).

Under the Senior Manager & Certification Regime (SM&CR), the rules around individual accountability are tightening. Senior leaders, board members, and line managers will be expected to take ownership of how misconduct is managed in their teams. This includes evidence of how they are creating safe and transparent reporting environments, demonstrating an active overview of culture risks, not just delegating responsibility to HR.

If misconduct is ignored or dealt with poorly, leaders themselves could face career-damaging regulatory consequences.

Reputational risk

In a highly competitive sector, poor behaviour that goes unchecked damages trust and mishandled misconduct cases can trigger public scrutiny and high profile media cases, damaging your credibility.

Regulatory risk

Failure to track, report and address misconduct could trigger investigations and enforcement action, having a direct impact on regulated status. Supervisors will expect clear records, defensible audit trails, and data-driven oversight to show that culture risks are being actively managed.

In short, cultural blind spots will carry regulatory consequences.

How Culture Shift supports organisations to comply with the new FCA NFM rules

Culture Shift is the compliance-ready platform for preventing and managing bullying, harassment, and misconduct. With regulations raising the bar across the workplace, boards need evidence that culture risks are being addressed.

Without safe and effective response and reporting channels, senior managers risk failing SM & CR responsibilities if misconduct goes unreported.

Anonymous reporting

Fear of retaliation remains a key barrier to reporting misconduct and speaking up in the financial sector due to strong power dynamics and low confidence levels in resolution and outcomes. Anonymous reporting has been proven to increase disclosures of misconduct and remove barriers to reporting.

Culture Shift’s anonymous reporting platform:

• Provides a safe, secure and confidential reporting channel
• Encourages disclosure by removing barriers to speaking up
• Demonstrates to regulators that your firm has a robust and effective reporting mechanism in place, not just written policies

Structured Case Management

With the need for serious cases of NFM to be included in regulatory references, firms will need to ensure they have robust, consistent and well documented processes for capturing and managing incidents. This means being able to clearly demonstrate how cases of bullying, harassment, discrimination and workplace violence are identified, recorded and escalated when appropriate and serious cases are documented.

Culture Shift’s comprehensive case management system allows financial firms to:

• Capture, track and escalate incidents consistently in a compliant case management system
• Build a clear audit trail to support FCA compliance to protect your firm during investigations
• Demonstrate to stakeholders and employees that misconduct is addressed transparently and with accountability

Data & Analytics

Data-driven insights will be essential for firms to pinpoint hot spots for targeted action where it is needed most and deliver direct interventions, proving that risks are being actively managed and misconduct prevented, rather than simply reacting after the events occur.

Boards will need regular, reliable access to data on NFM to demonstrate effective cultural oversight and fulfil their accountability obligations. The FCA expects boards and senior leaders to evidence not only issues are identified and addressed but that they are actively monitoring trends to drive sustainable change.

By having access to regular data on NFM can reduce the likelihood of misconduct but also provides boards and senior managers information and evidence they need under the Senior Manager & Certification Regime (SM & CR), reinforcing that culture and conduct risks are being actively governed.

The Culture Shift platform provides:

• In-depth data dashboards allow firms to identify risk patterns and emerging risks early, helping you make informed decisions and take early action
• The ability to generate transparent reports that demonstrate compliance and accountability under FCA expectations
• Reliable data for boards and senior leaders for SM&CR accountability
• Evidence of continuous monitoring of cultural risks, with clear analytic data proving you are inspection-ready

Training & Awareness

All employees must understand the consequences of misconduct and poor behaviour and the seriousness of breaches. Firms should provide mandatory training for all employees to help them understand what constitutes misconduct along with highlighting how employees can raise concerns safely and reassurance that reports are handled confidentially, fairly and without fear of retaliation.

Line Managers and Supervisors need to be adequately trained to recognise and manage reports of misconduct whilst understanding their personal accountability duties under the Senior Manager & Certification Regime (SM & CR).

Culture Shift can:

• Provide training for managers to ensure they have the skills to handle reports effectively
• Provide awareness campaign material that is ready to roll out across your firm

Complete guide to navigating the FCAs Non-Financial Misconduct Rules