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From 1 September 2026, every SMCR firm in the UK faces a significant change to its conduct obligations. The FCA’s new non-financial misconduct (NFM) rules introduced under Policy Statement PS25/23 and new rule COCON 1.1.7FR , explicitly bring serious workplace bullying, harassment, and violence within the scope of the Conduct Rules for non-bank firms for the first time.
That means asset managers, investment firms, insurers, and the tens of thousands of other FCA authorised businesses operating under SMCR now face the same NFM standards that banks have been subject to for years. With the implementation deadline firmly in view, the question for compliance teams is no longer whether this applies to your firm. It is whether your policies, your conduct breach recording processes, and your SMCR system are ready.
Non-Financial Misconduct (NFM) refers to serious misconduct that is not financial in nature. The FCA’s guidance focuses primarily on bullying, harassment, and violence, but is not limited to those behaviours. Importantly, unlike harassment under the Equality Act 2010, the conduct does not need to be related to a protected characteristic such as race, age, or sex, so the scope of conduct that may constitute NFM is potentially wider than discrimination law.
That said, not all poor workplace behaviour will be caught. The seriousness threshold aligns with the Equality Act threshold for harassment conduct that violates an individual’s dignity or creates an intimidating, hostile, degrading, humiliating, or offensive environment. Minor incidents will not breach FCA rules. The FCA has added specific factors for assessing seriousness, including whether conduct is repeated or part of a pattern, the duration and impact, and any power imbalance between the parties involved.
For banks, NFM was already within scope of the FCA’s code of conduct (COCON). For everyone else: asset managers, investment firms, insurers, and the broad range of non-bank firms operating under SMCR this represents a genuine step change.
The FCA has been explicit about what comes next. PS25/23 states that this publication brings the FCA’s policy work on NFM to a close, and the regulator’s focus will now turn to how firms are tackling it in practice. In plain terms: the guidance phase is over, and the supervisory phase begins in September.
The FCA’s approach is intended to support more consistent outcomes across the industry, reduce uncertainty for decision-makers, and improve firms’ ability to take decisive action when standards are breached. The message for compliance teams is that robust systems, documented processes, and evidenced training will matter because the FCA will be looking for them.
The FCA has identified four areas firms must review and update ahead of the implementation date.
Staff policies and conduct frameworks are the starting point. Firms need to update their codes of conduct, disciplinary policies, and any NFM-specific guidance to reflect the new COCON rule. The definition of what constitutes NFM, the threshold for regulatory reporting, and the escalation pathway from initial allegation to outcome all need to be clearly set out and understood by managers and HR alike.
Conduct breach reporting processes need updating to include a clear pathway for NFM incidents from identification through investigation, disciplinary outcome, and FCA notification where required. Firms must ensure that serious NFM findings are consistently reflected in regulatory references to prevent individuals from moving between employers without their conduct history following them. This regulatory reference requirement is one of the more significant practical changes, and it has direct implications for how firms record and retain conduct information.
Fitness and propriety assessments need to explicitly address NFM history going forward. The FIT sourcebook guidance confirms that non-financial misconduct will need to be considered as part of the fit and proper assessment which firms are required to carry out in respect of senior managers and certified staff. The FCA has also clarified that private life conduct is relevant to F&P where it presents a material risk that the individual will breach regulatory standards, although firms are not expected to investigate trivial allegations or proactively monitor social media.
Training and awareness is the fourth area, and arguably the most time-sensitive. The FCA expects firms to evidence that all COCON-in-scope staff have been made aware of the new rules and understand how they apply to them before the implementation date. For firms with large or geographically dispersed populations including those with appointed representatives, tracking and evidencing that training at scale is a real operational challenge.
One area of genuine uncertainty during the consultation period was the question of manager liability. PS25/23 clarifies that managers’ accountability in relation to NFM is relative to their knowledge or authority, not an absolute standard. A manager who genuinely did not know about misconduct, and could not reasonably have known, will not automatically be held responsible. The standard is reasonable steps, not strict liability.
This is important context for firms when training their senior managers. The question is not whether a manager can be held personally responsible for every incident in their team, but whether they have taken proportionate steps to prevent, identify, and address NFM within the scope of their role and authority. That is a judgement-based standard which means documentation of the steps taken becomes essential.
Meeting the FCA’s NFM requirements is not just a policy exercise. Firms need the right systems in place to record incidents, track outcomes, maintain conduct histories, and evidence training. All this in a way that produces a clean audit trail on demand.
This is where your SMCR platform becomes central to your NFM compliance programme. The ability to record a conduct breach at the individual level, link it to the specific conduct rule involved, capture the corrective action taken, and retain that record for regulatory reference purposes is not a nice-to-have, it is the infrastructure the FCA will expect to see working in practice.
The FCA’s own framing is instructive here. The regulator formally links organisational culture especially regarding non-financial misconduct to regulatory conduct standards. To use the FCA’s own words: “culture risk is conduct risk.” Firms are expected to take reasonable steps to assess and address this risk, not simply to react when things go wrong.
For compliance professionals, that means NFM is no longer a matter to be handled entirely by HR with an occasional compliance sign-off. It sits squarely within the SMCR framework, with all the accountability, recording, and reporting obligations that entails.
The good news is that firms have until 1 September 2026 to get their house in order and the FCA has confirmed the rules will not apply retrospectively. The less comfortable news is that the supervisory clock starts the moment that date passes.
If you would like to understand how Actus Comply can support your firm’s NFM readiness programme including breach capture, fitness and propriety tracking, and conduct rules training reporting. Simply visit www.actus.co.uk or get in touch with the team.
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