On 12 December 2025, the FCA published a policy statement (PS25/23) on tackling non-financial misconduct in financial services.
This follows a consultation on non-financial misconduct (NFM) and how this might constitute a breach of the conduct rules in the FCA’s Code of Conduct (COCON). 95% of respondents to the consultation agreed that new guidance was needed. This message also came through strongly in the FCA’s wider engagement with industry, trade bodies and legal practitioners.
In light of this feedback, the FCA is amending COCON to make it easier for firms within the senior managers and certification regime (SM&CR) to interpret and consistently apply the rules. It is also amending the guidance in FIT to explain how NFM forms part of FIT.
The guidance covers how firms can apply the FCA’s rules on minimum standards of behaviour for financial services employees, and the factors they should consider when assessing whether someone is fit and proper for their role.
The FCA has made minor changes to address the main areas of feedback. These include:
- Providing new examples and flow diagrams to help apply COCON consistently.
- Ensuring clearer alignment with employment law.
- Clarifying that managers’ accountability is relative to their knowledge and authority
- Withdrawing, or amending, examples and factors that risked imposing disproportionate burdens.
- Clarifying that firms are not expected to investigate trivial or implausible allegations, or breach privacy law when assessing fitness and propriety.
Some firms asked the FCA to go further, with more detailed examples. In PS25/23, the FCA explains that it cannot provide guidance for every situation and firms will always need to exercise their judgement. The primary responsibility for preventing and dealing with NFM lies with firms.
The changes are set out in the Non-Financial Misconduct (No 2) Instrument 2025 (FCA 2025/60), which will come into force on 1 September 2026, immediately after the Non-Financial Misconduct Instrument 2025 (FCA 2025/29) comes into force. This instrument aligns the conduct rules in banks and non-banks for cases of serious NFM.
As stated on an accompanying webpage, PS25/23 brings the FCA’s policy work on NFM to a close. It will now focus on how firms are tackling it in practice.
In separate but related news, former hedge fund manager Crispin Odey, who was banned from the finance industry by the FCA and fined £1.8m, claims that the FCA pursued an “agenda” over NFM that led to his removal from his hedge fund and his firm’s collapse. The FCA argued that Odey/s behaviour demonstrated a lack of integrity, meaning that he was not a fit and proper person to carry out regulated activities. A trial is scheduled for March.
The FCA’s increased scrutiny on unwanted conduct in the finance industry may very well make some individuals feel hot under the collar. This appears to be the FCA’s aim in its endeavours to clean up the reputation of the City and to eliminate behaviours that contravene employment and discrimination laws.
This blog was written by Anita Vadgama, Partner, who acts for FCA-regulated professionals and those regulated by the Solicitors Regulation Authority.
