When workplace misconduct becomes a regulatory issue: the FCA’s new rules from 1 September 2026

New FCA rules and guidance on non-financial misconduct came into force on 1 September 2026, giving regulated firms clearer expectations around how serious workplace behaviour should be handled. 

For FCA-regulated firms within scope of the Conduct Rules, misconduct such as bullying, harassment and violence may no longer be viewed solely as an HR issue. Depending on the circumstances, it could also affect an employee’s compliance with the FCA Conduct Rules or whether they are considered fit to perform their role. 

In practice, this means HR and compliance teams may need to assess serious allegations together from an earlier stage, rather than treating the employment and regulatory processes separately. 

What's changed?

The FCA has extended its Conduct Rules for non-bank firms to cover certain non-financial misconduct towards colleagues where there is a clear connection to work. 

This brings the position for non-banks more closely into line with banks and can cover behaviour including bullying, harassment and violence. The rule does not apply retrospectively and does not mean every workplace complaint will automatically become a regulatory matter. 

The FCA has also published new guidance explaining how firms should approach non-financial misconduct when assessing whether Senior Managers and Certification Staff are fit and proper. 

The Conduct Rules and fitness and propriety tests do not cover exactly the same behaviour. Misconduct outside work may fall outside the Conduct Rules, but it can still be relevant to fitness and propriety if it raises concerns about someone’s integrity, conduct or suitability for a position of trust. 

What does this mean for workplace complaints?

Firms may need to consider both the employment and regulatory implications when allegations of serious misconduct arise. 

That does not mean every grievance or disciplinary issue needs to be reported to the FCA – firms will still need to consider the facts and apply sound judgement. 

However, where an allegation involves someone subject to the Conduct Rules or fitness and propriety requirements, HR and compliance teams should consider at an early stage whether the issue could have wider regulatory consequences. 

That could affect how an investigation is conducted, whether a Conduct Rule breach needs to be recorded or reported, the individual’s fitness and propriety assessment and, where relevant, future regulatory references. The FCA says firms should have considered whether their policies and processes for Conduct Rule reporting, fit and proper assessments and regulatory references need updating. 

What do the new rules mean for managers? 

The new guidance puts greater focus on how managers respond to misconduct. 

Managers should take reasonable steps to prevent harassment and other misconduct. This could include intervening where appropriate and making sure the firm’s policies and processes for identifying and dealing with misconduct are followed properly. 

What’s reasonable will depend on the manager’s knowledge, responsibilities and authority. A manager will not automatically be responsible just because misconduct happened within their team, but failing to act appropriately when they knew or should have known about it could create regulatory concerns. 

What should firms check? 

Firms should consider whether the changes require updates to their: 

• disciplinary, grievance, bullying and harassment policies 

• processes for escalating issues between HR and compliance 

• Conduct Rule breach assessments and reporting 

• fitness and propriety assessments 

• regulatory reference processes 

• training for managers and Conduct Rules staff 

Businesses should also make sure it’s clear who decides whether an employment issue has regulatory implications and that those decisions are documented consistently. 

The FCA has confirmed that firms are not expected to monitor employees’ private lives or social media, revisit previous fitness and propriety assessments or investigate allegations about employees’ private lives that are trivial, implausible or irrelevant. 

For regulated employers, the priority is to recognise serious concerns early, escalate them to the right people and consider both the employment and regulatory implications.  

If you need to check whether your employment policies, investigation processes and HR/compliance escalation arrangements meet the new approach to non-financial misconduct, our employment solicitors can review them with you and advise on any areas that may need attention.