FCA criticised for not providing more case studies after issuing final NFM guidance

The FCA has been criticised for not providing more case studies after issuing its final guidance on how financial services firms address bullying, harassment and violence.

The FCA published the guidance last week (12 December 2025), with it expanding on the regulator’s July 2025 rules on non-financial misconduct (NFM).

It comes after the FCA asked firms if they wanted additional guidance to help them take action. Some 95% of consultation respondents called for further clarification.

The new guidance covers how firms can apply FCA rules on minimum standards of behaviour for financial services employees.

It also covers the factors firms should take into account when assessing whether someone is fit and proper for their role.

In addition, there are new examples and flow charts to support the application of the rules.

However, the FCA said: “Some firms asked us to go further, with more detailed examples. We can’t provide guidance for every situation – firms will always need to exercise their judgement.”

Imogen Makin, counsel at WilmerHale, felt that while the guidance “should prove useful for firms in their implementation of the rules”, it is a “particular cause for concern” that more case studies are not being provided.

She said: “The FCA’s final guidance on NFM, should prove useful for firms in their implementation of the rules.

“For example, it includes flow diagrams setting out the steps to determine whether conduct is in scope of the code of conduct (Cocon) and potentially represents a breach.

“The FCA has also declined to provide more case studies, stating that the guidance cannot cover every scenario and the primary responsibility for preventing and dealing with it lies with firms themselves.

“This is particular cause for concern, given that the FCA confirmed it will now ‘focus on how firms are tackling NFM in practice’. Those in scope of the new rules should, therefore, ensure they focus on training their employees and enhancing their policies and procedures now, to make clear the conduct that is unacceptable and that NFM will not be tolerated.”

Regular reviews

When issuing the new guidance, the FCA stated that “the primary responsibility for preventing and dealing with NFM lies with firms”.

And as part of the guidance, the FCA also issued clarifications about the new rules.

This includes there being clearer alignment with employment law, clarification that managers’ accountability is relative to their knowledge and authority and the clarification that firms are not expected to investigate trivial or implausible allegations or breach privacy law.

“Our new rules, supported by this guidance, will help drive higher and clearer standards across industry,” the FCA said.

Arabella Ramage, legal and regulatory director at the Lloyd’s Market Association (LMA), urged the FCA to keep its guidance under “regular review to ensure that it delivers the right outcomes”.

She added: “The LMA supports the FCA’s commitment to tackling NFM and creating a safe and inclusive financial services sector.

“Clear, consistent standards and guidance are essential to protect employees, uphold integrity and ensure our industry remains a career of choice for the best talent.”

Meanwhile, James Alleyne, partner in the financial services regulatory team at Kingsley Napley LLP, said that “one big question is whether or not the FCA will start enforcing directly for NFM or instead will rely on firms to police this issue”.

“Only time will tell what the answer to that is”, he said.

“The FCA has long signalled its intention to raise standards in the regulated sector and will hope this guidance gives firms the certainty they have been craving to implement the new rules and standards effectively.

“The regulated community will particularly welcome the clarifications around fitness and propriety assessments, as well as the distinction between the private and professional lives of staff subject to the conduct rules.”

Enforcement

The new rules come into play on 1 September 2026. The guidance will come into force at the same time. 

According to the FCA, most respondents (80%) agreed that the guidance should come into force on the same date as the new rules.

It added: “In our view, it would not be appropriate to bring the Cocon guidance on the new rule into legal force before the rule, as the rule does not have retrospective effect.

“However, we are publishing it now so that firms will have a full eight months in which to amend their policies and processes where required.”

Francesca Lopez, senior associate in the employment team at Kingsley Napley, said: “Regulated firms now have until September 2026 to get ready for the new conduct rules to take effect.

“This means there is still time to review and reiterate policies on bullying, discrimination and harassment, for example, and to ensure whistleblowing channels are working effectively.

“Key will be training, ensuring all staff understand the behaviours that are unacceptable and that managers are equipped to identify and handle serious issues of NFM.

“These have long applied from an employment law perspective but the fact the regulator may now take an interest may have greater firm and career reputation implications.”

Sophie White, partner at Eversheds Sutherland, added: “The FCA’s decision to take forwards and publish final guidance on NFM will be welcome news for financial services employers and provides further clarity on some of the questions raised by the draft guidance, including the applicability of the guidance to banks.

“Employers should now turn their attention to implementing the new rule and guidance, including updating policies and training in advance of 1 September 2026.”