Non-Financial Misconduct: What should firms be doing now?

After much deliberation, the FCA published its latest thinking on Non-Financial Misconduct (NFM) in July 2025. It involves a further consultation (open until 10th September) with a suggestion that the results will be published before the end of this year to enable firms to update their processes by the implementation date of 1st September 2026.

In this article, Peter Haines, Director of GRC Training, provides key suggestions on what firms should consider now and the changes they could make in advance of the September 2026 deadline.

1. Engage Senior Management

NFM is too important a topic for Senior Management not to be fully engaged. A culture which results in undue tolerance of NFM can have a significant impact on employees, Senior Managers and even the firm’s own regulatory status.

An act of non-financial misconduct by staff, tolerance of NFM by senior employees or a culture of ignoring misconduct within the firm can result in a range of regulatory issues, such as a breach of a conduct rule and doubts over an individual’s fitness and propriety.

NFM is not a matter to be taken lightly. We have seen, through our interactions with Boards and executive committees, that senior personnel are often not only engaged, but frequently confused by the uncertainty that has existed since the FCA’s first consultation on NFM in September 2023.

Hopefully the FCA’s revised guidance will be sufficient to provide a roadmap for Senior Management to plan a route to effective compliance with the new proposals by September 2026. It is important that this project should not just be driven by Compliance. It needs full business and Senior Management involvement.

2. Ensure that HR, Compliance and Senior Management are working closely together on NFM

It’s vital to ensure that the relationship between HR and Compliance is almost seamless. HR staff might well be the first of the control or support functions to become aware of NFM issues in practice. Alternatively, the issues might come directly to the Compliance function. Both departments have a key role to play here and must work together to ensure consistency of approach and robust (and confidential) management of NFM issues.

3. Ensure that there is appropriate governance around NFM decisions

Firms have adopted varying approaches to NFM issues as they arise. One firm, for example, told me that any potential conduct rule breach is considered by its board of directors. Others take a different route, involving both HR and Compliance in determining the appropriate course of action.

My advice is this: when a decision could lead to either a reportable (to the regulator) conduct rule breach or raise concerns about an individual’s fitness and propriety, all relevant functions with a direct stake in the outcome must be involved. These include:

• A senior member of the line management of the individual(s) involved
• HR
• Compliance
• The holder of the prescribed responsibility for conduct rules reporting.

The involvement of these parties (they might not be mutually exclusive) should ensure appropriate and consistent decisions being made at the right level of seniority.

4. Review and update your policies and procedures

One of the issues with the FCA’s initial consultation in September 2023 was that it needed to align with developments in UK employment law. The introduction of new legislation designed to counter sexual harassment in the workplace in September 2024 necessitated the review of certain policies and procedures. However, NFM is broader in scope, so firms  would be well advised to review all relevant processes in advance of September 2026 to ensure that they meet the FCA’s expectations.

The start of every year is always a busy time for financial services firms, so why not start before the FCA confirms its guidance at the end of this year?

5. Consider carefully how to train staff in the new conduct rules environment

The FCA states in CP25/18 that “we remind firms of their duty under section 64B FSMA to notify conduct rules staff about the rules and take all reasonable steps to make sure they understand how they apply to them (COCON 2.3).”

This means that training must be tailored to the various roles within the firm. In addition, it is important to remember that it applies to all staff, not just client-facing employees.

Training on the conduct rules can be provided using eLearning modules, instructor-led training or a blended approach.

In conclusion, the more firms can do before the end of this year to plan for September 2026, the better. After all, the conduct rules exist now and the FCA’s approach to NFM has been developing for several years.

Any NFM issues that arise in the coming months will still need to be addressed. The measures outlined above should help firms tackle NFM professionally and consistently now and going forward.

Webinar: Non-Financial Misconduct: The Way Forward

Join us for a focused webinar where Peter Haines and Nigel Sydenham delve into what firms need to do now to ensure they’re taking the right approach to NFM.

Date: Wednesday 24th September 2025
Time: 10:00 am - 10:45 am
Delivery: Virtual, Zoom

Complete the form below to register your place.

Non-Financial Misconduct Training Solution

Peter has over 35 years’ experience in the field of regulation and compliance. A chartered accountant, Peter spent 6 years working with the UK’s SFA (now the FCA) and has headed up regional and global compliance functions at Paribas, UBS Investment Bank and Bank of America.

Since 2006, Peter has specialised in training, focusing on boards, senior management and assisting the next generation of compliance officers. His coverage includes most areas of compliance and financial crime, corporate governance and risk management. His style is inclusive, interactive and based on practicalities, not just rules.

As Director of GRC Training, he works closely with our clients to ensure that our programmes are tailored to their exact needs and meet, or surpass, their expectations.