In Focus: The FCA’s New Guidance on Non-Financial Misconduct

As firms adjust to the new guidance, we outline key changes in expectations and how firms can approach non-financial misconduct cases.

By Becky Critchley, Nicola Higgs, Rob Moulton, Nell Perks, Jonathan Ritson-Candler, Charlie Bowden, and Charlotte Collins

Key Points:

• The FCA’s new Handbook guidance on NFM under COCON and FIT, and the expanded scope of COCON for non-banks, took effect on 1 September 2026, resulting in changing regulatory expectations regarding how firms address NFM.
• In parallel, employment law changes under the Employment Rights Act 2025, including a strengthened duty to prevent sexual harassment and uncapped unfair dismissal compensation, significantly impact how firms handle instances of NFM.
• NFM cases remain highly fact-specific, and firms will want to ensure that HR, legal, and compliance departments have the right tools to reach fair, consistent, and well-documented outcomes.

Background

Non-financial misconduct (NFM) has been a growing area of regulatory focus for some time, with the FCA emphasising that individuals in financial services must uphold high standards. Yet, despite this heightened attention, many firms have grappled with uncertainty about precisely how the FCA expects them to monitor and approach such conduct, and when it is truly relevant to an individual’s fitness to perform their role, particularly given that many real-life scenarios are complex and nuanced.

A wave of recent developments, including new FCA guidance on NFM, amendments expanding the scope of the FCA’s Conduct Rules for individuals at non-bank firms, high-profile enforcement cases, and important changes to employment law, has resulted in shifting expectations in how firms address and handle NFM. These changes demand fresh thinking about policies, procedures, and culture.

The imperative for firms is clear: they must be equipped to handle NFM matters fairly, consistently, and in a manner that satisfies both regulatory and employment law requirements. In this article, we outline the key changes, explore their practical implications, and address the questions firms most frequently ask as they navigate this new terrain.

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