The new FCA rules for tackling non-financial misconduct in financial services

October 22, 2025

The FCA released a consultation paper on the 2nd of July 2025 [1] seeking feedback on draft guidance to assist firms on how to interpret and apply the new rules which will come into effect on the 1st September 2026. The new rules aim to capture non-financial misconduct in non-banks due to serious misconduct such as bullying, harassment and violence, which have been highlighted as a regulatory concern by the FCA.

Whilst some might argue that these areas are traditionally already covered by HR teams, employment tribunals or the police/criminal justice system and that the new rules are adding a regulatory burden with a possible duplication in oversight, the FCA believes that the changes will promote healthy and inclusive workplace cultures and will deepen trust in financial services.

The new rules will significantly impact how firms address these types of behaviours, especially within the context of the Senior Managers and Certification Regime (“SMCR”) and the Code of Conduct (“COCON”).

The aim of the FCA is to give firms confidence to act against serious misconduct, ensure consistency across the financial sector and provide clarity when non-financial misconduct can breach FCA rules. These changes are consistent with their strategy for 2025 to 2030 [2].

Who does this apply to?

The new rules apply to all (i) firms with Part 4A permissions and (ii) staff in those firms who are subject to COCON.

What is changing?

From the 1st of September 2026, COCON will be extended to cover serious non-financial misconduct in non-banks, by aligning COCON with existing rules for banks as per the new rule COCON 1.1.7F R. Firms will also be required to report disciplinary actions (e.g. written warnings, suspensions, dismissals) which are related to non-financial misconduct. In conjunction, the FCA has consulted and obtained feedback on the draft handbook guidance and will publish feedback on the responses received. The consultation process closed on the 10th September 2025.

In terms of next steps, the FCA will issue a Policy Statement once they have finished reviewing the comments which will confirm whether the FCA will proceed with the proposed guidance on applying the new rules or refine the draft guidance based on the feedback received.

How can we support you?

At Herrington Carmichael, our expert regulatory law team advise clients across a wide range of sectors including payment services, insurance, wealth management, IFA and funds.

To tackle these new rules we can offer a range of compliance support to help you, for example:

  1. Policy development & Review
    We can draft or update your internal policies to ensure they reflect the expanded scope of COCON and that FIT (Fit and Proper Test) assessments take the new rules in to account, clearly define and prohibit non-financial misconduct and develop robust procedures for reporting, investigating and escalating incidents.
  2. Training workshops
    We provide bespoke training for Firms on the full range of regulatory topics, including training for Senior Managers, certification employees and other colleagues in scope of COCON and SMCR on how to comply with their regulatory obligations.
  3. Compliance audits and gap analysis
    We can review your current SMCR and COCON frameworks, identify gaps in how non-financial misconduct is handled and recommend practical steps to align with FCA expectations.
  4. Incident response and reporting
    We advise on how internal investigations into non-financial misconduct are managed and analyse conduct breaches to determine whether FCA reporting is required and if required, draft applicable regulatory notifications.
Key dates to remember

1st of September 2026 – New COCON rules on non-financial misconduct come into effect.

Contact us

If you would like to speak to someone in our regulatory team, please contact Mark Chapman on 07792 950 447 or 01276 854 928 or via email on mark.chapman@hc.law, alternatively Brendon Lesar on 07551 420 610 or 01276 748 378 or via email on brendon.lesar@hc.law.

[1] CP25/18: Tackling non-financial misconduct in financial services | FCA

[2] https://www.fca.org.uk/publication/corporate/our-strategy-2025-30.pdf

Mark Chapman
Partner, Commercial
<script>
document.addEventListener('DOMContentLoaded', function () {
  const deptEl = document.getElementById('acf-author-department');
  const department = deptEl?.dataset?.department;

  if (typeof gtag === 'function' && department) {
    gtag('set', { author_department: department });
  }
});


  window.dataLayer = window.dataLayer || [];
  const dept = document.getElementById("author-department")?.textContent?.trim();
  if (dept) {
    window.dataLayer.push({
      event: "authorDataReady",
      author_department: dept
    });
  }

</script>
View profileContact Us

This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.

Latest Legal Insights

Best Law Firms 2024

Herrington Carmichael has once again been named in the Times Best Law Firms. We were first listed in 2023 and have once again made the Best Law Firms list for 2024.  

www.thetimes.co.uk/article/herrington-carmichael

Best Law Firm 2024