UK FCA finalises guidance on NFM in financial services

The UK Financial Conduct Authority has published a policy statement PS25/23 setting out its final guidance on tackling non-financial misconduct (NFM) in financial services. The FCA is amending the Code of Conduct (COCON) and Fit and Proper (FIT) sourcebooks to clarify how serious workplace misconduct, such as bullying, harassment, and violence, can be a breach of the conduct rules in COCON and impact fitness and propriety assessments.

Following feedback to the July consultation, where respondents requested for additional clarity and agreed that new Handbook guidance was needed, the FCA is making the following changes:

• Including 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.

The new guidance will come into force on 1 September 2026, alongside the extension of existing NFM rules for banks to non-bank financial services firms (COCON 1.1.7FR). Firms are expected to update policies, train staff and ensure compliance ahead of implementation. The FCA emphasises that guidance cannot cover every scenario and firms must exercise judgment and take reasonable steps to prevent and address NFM. The UK Prudential Regulation Authority has confirmed it will not proceed with any proposals in its 2023 consultation (CP18/23), including those on staff fitness and propriety. Instead, it expects dual-regulated firms to consider the FCA's guidance when making these assessments.

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