Regulatory Updates

On December 12, 2025, the FCA published its final guidance on non-financial misconduct (NFM) in PS25/23, which will come into force on September 1, 2026. This follows the FCA’s consultation in CP25/18 published in July last year on proposed guidance to help firms apply the Code of Conduct (COCON) rules and to take NFM into account in fit and proper assessments. Guidance on fit and proper assessments is contained within the FCA’s FIT Handbook. The FCA said that 95% of respondents strongly agreed that guidance on NFM was needed and the regulator has now finalised its approach.

CP25/18 also contained a policy statement making a new rule that serious bullying, harassment and violence in the workplace or against a work colleague qualify as misconduct which could be a conduct rule breach. The FCA will expand the scope of its COCON rules to take this into account from the same date as the implementation of the guidance (September 1, 2026).

The final guidance closely aligns with CP25/18, but the FCA has taken into account the feedback received and made minor amendments such as including new examples and flow diagrams, made clearer alignment with employment law, clarified managers’ accountability and made amendments where there was a risk of disproportionate burdens.

The new guidance in PS25/23 aims to help firms address NFM in a fair and consistent way and includes the following:

 

Key COCON Guidance

• What is NFM? While there is no formal definition of NFM, the FCA’s feedback states that it is ‘any misconduct not of a clearly financial nature’. This covers a wide range of activities but broadly covers bullying, harassment and violence.
• Serious Misconduct: There is clarification on what constitutes ‘serious misconduct’ and the factors that firms should take into account when deciding if NFM is serious enough to breach conduct rules.
• Boundaries Between Work and Private Life: The guidance provides examples of when conduct outside the workplace may be closely connected to work and fall under the rules. This includes training events, award ceremonies or workshops organized by a client, where the conduct relates to performance of qualifying functions, which is any role that brings an individual into the scope of the conduct rules. The FCA reminds firms that the responsibility for preventing, assessing and dealing with NFM rests with them.
• Managers’ Accountability: Following concerns relayed in the feedback from firms in relation to managers’ responsibilities for preventing or addressing NFM, the revised guidance makes it clearer that the FCA would not expect a manager to be held responsible for failing to stop NFM if they could not reasonably have been expected to know about it.
• Historical NFM: The FCA has clarified that incidents that took place before September 1, 2026 , should be dealt with under the requirements in place at the time.

 

Key FIT guidance

• Fitness and Propriety Assessment: When assessing an individual’s honesty, integrity and reputation, conduct inside and outside of the workplace may be relevant. The guidance gives examples of when conduct in an individual’s private life may be relevant.  Also, minor breaches both inside and outside of the workplace, that could indicate disregard for the law or ethical obligations, may be relevant.
• Behavior in Private and Personal Life: The FCA clarified that firms are not expected to monitor their employees’ private lives. However, if a firm becomes aware of something that would affect their assessment of fitness and propriety, they should take reasonable steps to investigate and assess the possible impact on fitness and propriety. Conduct in someone’s private life that demonstrates a material risk that the individual will breach regulatory standards if repeated at work may be relevant to a firm’s FIT assessment. This includes violence, sexual misconduct or criminal conviction. Firms are reminded that they are not expected to investigate trivial allegations or those not relevant to FIT.
• Conduct on Social Media: An individual’s private social media activity will be relevant it if indicates a material risk that they will breach regulatory standards and requirements. Similarly to above, this includes violence, criminal activity or behavior suggesting a risk of bullying or harassment at work. Firms are not expected to proactively monitor employees’ social media activity nor investigate allegations related to non-material matters.

The new guidance comes into effect on September 1, 2026, together with the new rules. Firms are expected to have updated relevant policies and procedures by that time.

 

Kroll’s View

We believe that firms will welcome the new rule widening the scope of COCON from September 1, 2026, which harmonises the rules for banks and non-banks and is now more aligned to employment law.

We are pleased that there was clear support from the industry for guidance on NFM in response to the consultation. Whilst there will always be an element of subjectivity and judgement required by firms, the guidance will help them to assess whether NFM results in a COCON breach and how to take NFM into account when undertaking fitness and propriety assessments.

 

How Kroll Can Help

We can advise and support firms on these new rules and guidance in relation to NFM. This could involve assisting with or advising upon:

• Reviewing and updating existing policies and procedures in line with the new COCON and FIT rules.
• Training senior managers and staff on the conduct rules standards, including guidance on workplace culture and tackling NFM.
• Reviewing and updating procedures for fitness and propriety assessments in light of the rule changes and guidance.

If you require any assistance with any of the items mentioned above or would like to learn more about how Kroll can support you, please reach out to your usual contact at Kroll or any of the contacts listed below.