Three common pitfalls in Non-Financial Misconduct Training and how to maximise impact

The FCA’s new rules and guidance on non-financial misconduct (NFM) come into force on 1^st September, and most firms will be well-advanced in planning for their implementation. This will typically have included a review of internal policies and procedures, particularly those relating to the fit and proper test and the handling of conduct rule breaches.

For many firms, the final stage of the implementation plan will include staff training. However, delivering effective training on NFM can be difficult, due to both the complexity of the regulatory framework and the sensitivity of some of the subject matter.

Drawing on CCL’s extensive experience of delivering conduct training, Nigel Sydenham outlines three common weaknesses in NFM training and what firms could do to alleviate this.

1. Lack of relevant and realistic scenarios

To be effective, conduct training needs to ensure that participants not only know the relevant rules, but can apply them in the context of their day-to-day activities. Discussion of real-life scenarios are an essential element of such training, but all too often the case studies that are used suffer from two basic flaws.

Firstly, the scenarios may be generic, rather than being tailored to the specific audience. For example, in the context of NFM training, a case study based on the consequences of a lunchtime drinking session may seem irrelevant to attendees if this is something that simply never happens in their context (for example, if the whole team works remotely).

Secondly, even if attendees can relate to the case study, it’s unlikely to add value if it is too simplistic and clear-cut. For example, if participants are presented with an obvious case of sexual harassment, and then asked whether the behaviour is acceptable, they are likely to feel patronised, and the opportunity for meaningful discussion of the issues will be wasted. By contrast, less clear-cut (or ‘grey’) scenarios – for example, exploring when banter might become abusive, or the boundary between an employee’s private life and their work, can help to encourage real engagement with the issues.

2. Focusing on the detail of the rules

Of course, rules matter, and it is important that employees know the specific obligations that apply to them. However, in the context of NFM, focusing solely on the granular details of the rules, and the precise threshold for a breach, risks sending mixed messages.

The FCA has made clear that, to constitute a breach of the conduct rules, NFM will need to be serious in nature. It is, obviously, important that employees understand the consequences of such extreme behaviour, particularly given the potential for it to have an ongoing impact on their career. However, responsible firms will want to make clear that NFM is unacceptable, even if it does not cross the threshold into a conduct rule breach.

Poorly designed NFM training can give the impression that the firm is only concerned with preventing rule breaches and that any behaviour falling short of this will be tolerated. Yet, if done well, such training is a valuable opportunity to reinforce the firm’s internal values and culture, and its expectations of staff – for most firms this will centre on dignity and mutual respect, a standard that goes well beyond simply ‘not breaking the rules’. Furthermore, effective training can help reassure employees that, if they speak-up, their concerns will not be dismissed or minimised but instead will be heard and acted upon.

3. Covering the FCA rules in isolation

A siloed approach to NFM can lead to a firm training staff on the FCA’s new rules and guidance, with no reference to the other related developments. Yet the changes to the FCA’s framework are one part of a broader trend, which includes updates to whistleblowing legislation and the impending enhancement to firm’s obligations to prevent sexual harassment.

Well-designed training will bring these elements together and explore their implications and interaction. By contrast, siloed training is likely to result in the need for multiple training events, potentially leading to increased cost and risking ‘training fatigue’.

Maximising impact in non-financial misconduct training

Our range of non-financial misconduct training courses are designed to help firms embed a deeper understanding NFM in a way that drives meaningful  behavioural change.

We use relevant and realistic scenarios to ensure learning is practical, relatable and applicable to the workplace.

Our in-house sessions encourage immersive and engaging discussion, helping learners not only understand NFM, but also recognise how to apply that understanding in their day-to-day roles and responsibilities.    

Through our blend of eLearning modules and live, interactive instructor-led training - designed for front and back office staff, with more in-depth sessions for compliance staff and briefings for senior management and the board - we support FCA-regulated firms in maximising the impact of their NFM training programmes.

If you’d like to explore how we can support your firm strengthen its approach to NFM training and maximise impact across the business, get in touch.

Nigel specialises in training boards, senior executives and other staff on the impact of regulation and regulatory change.

He is a CFA Charterholder and Chartered Fellow of the CISI, with over 20 years' of industry experience.

With a background in compliance in private banking and wealth management, Nigel has a particular interest in effective corporate governance and the management of compliance and regulatory risk. His interests also include issues relating to ESG and climate risk, conduct and culture (including non-financial misconduct), and all aspects of financial crime prevention, as well as the impact of fintech on compliance and regulation.

Recent assignments have included briefing multiple boards and executive teams on the Consumer Duty, delivering compliance and ethics training for senior managers and front-office staff and creating a user-friendly risk and compliance handbook for a major bank.