‘Tis the season to set the tone: FCA update on non‑financial misconduct and what firms should be doing now

Consultation on non‑financial misconduct: new rules and guidance

The FCA’s letter references the rule change for non-banks and the proposed guidance to clarify the scope of NFM across the Senior Managers and Certification Regime for banks and non-banks, which it communicated in July 2025 (for more detail see our briefing). Serious, substantiated NFM must be reported as a Conduct Rules breach where applicable and reflected in regulatory references. The FCA also expects such cases to be raised through whistleblowing channels. 

Although the new rule for non-banks is set to take effect on 1 September 2026, the FCA said it had not yet decided whether to issue additional guidance to help firms interpret the rules and asked for industry feedback on whether there is a need to do so, with a deadline of 10 September. Having assisted firms in preparing consultation feedback, it is clear that there is scope for the FCA to provide enhanced clarity on the application of the new rule and its expectations both in terms of individual conduct and also those in senior manager positions and with responsibility for building and sustaining cultures in which NFM is not tolerated but tackled robustly. The FCA has not committed to any particular timing for feedback following the closing of the consultation but it is not likely to come in time for the 2025 festive season.  In the meantime, firms would be well advised to have regard to the FCA’s expectations as articulated in the proposed guidance and to plan ahead for implementation of the new rule as well as any guidance issued.  A number of internal policies and procedures may need updating and communications and training may assist in reinforcing messages and evidence good governance. 

Bonus caps and EHRC engagement

On the removal of bankers’ bonus caps, the FCA has not yet undertaken a detailed post‑implementation review, noting that firms need time to adjust. It plans to decide whether to conduct a review next year, and is discussing the approach with the PRA, the Equality and Human Rights Commission (EHRC) and the Government Equalities Office.  Firms may wish to prepare for any review including conducting their own reviews of implementation. 

The FCA continues to engage with the EHRC under their memorandum of understanding and in March 2025 the FCA and EHRC jointly trained FCA staff on NFM and employer duties.

Whistleblowing

On whistleblowing, the letter explained that the FCA has updated its website to make it easier for external whistleblowers to report concerns, including clarifying that reports can be made even if confidentiality or non‑disclosure agreements (NDAs) are in place. The FCA’s Prescribed Person Report for 2024/25 showed an increase in reports and the FCA’s commitment to give as much feedback as possible while preserving anonymity. 

Whilst not referred to in the letter to the Committee, the recent publication of the FCA’s whistleblowing quarterly data for Q3 2025 revealed that culture was the second most prevalent issue among the top ten categories of allegations received between July and September 2025, totalling 206 reports and closely following the top-reported category, fitness and propriety, with 209 reports.  Firms should consider evaluating the FCA’s Q3 whistleblowing data as a reference point to benchmark their own speak‑up trends, including the mix of channels used, anonymity rates and the timeliness of feedback provided to whistleblowers and whether they could evidence management awareness and engagement on this topic. 

Supervisory action following the 2024 culture and NFM survey

In 2024 the FCA surveyed 1,028 regulated wholesale firms, requesting information about recorded NFM incidents in 2021–2023 and related use of confidentiality or settlement agreements (see our briefing on its NFM survey). Following publication of the aggregated survey results in October 2024, the FCA cautioned against simplistic interpretation of the number of incidents reported, noting that higher complaint volumes does not necessarily prove a poor culture and may in fact be an indicator of healthier speak‑up cultures. In its letter to the Committee the FCA reveals that, following the findings of its survey, it has engaged with a number of firms that appeared to be outliers relative to their peers to understand why this might be the case. As a result, the FCA reports that it has seen firms improve their management information and reporting on NFM, including presenting the results of the FCA's survey to relevant governance committees, delivering additional training and updating employee handbooks and policies.  The FCA confirmed that it does not currently plan to run a similar culture and NFM survey in other sectors.

With regards to NDAs: whilst the overall number of reported NFM incidents increased over the three years surveyed, the total number of NDAs fell during this period in wholesale banking and remained broadly static in other sectors. Across all portfolios surveyed, the total number of signed confidentiality agreements was 87 in 2021, 73 in 2022 and 51 in 2023. The FCA confirmed it does not intend to collect this data regularly but published full findings to allow benchmarking.  Firms may nevertheless wish to consider whether they are in line with market practice and FCA expectations in this area. 

Lloyd's Market Association initiatives

In its letter to the Committee the FCA noted and encouraged industry‑led work. In the insurance market, the Lloyd’s Market Association has delivered workshops on the FCA’s expectations and other professional bodies, including the Chartered Insurance Institute, have also been running workshops and webinars on regulatory expectations for managing non-financial misconduct.  However, the outcome of Lloyd’s consultation on its proposed new conduct framework for which feedback closed on 16 December 2024, remains outstanding.  

Wholesale brokers portfolio supervision

The FCA is taking forward supervisory work across the wholesale brokers portfolio to test whether firms’ detective and preventive controls are effective at an operational level so that misconduct can be prevented, stopped early, or addressed appropriately. The focus appears to be on the practical efficacy of controls rather than policy statements alone.

Open FCA supervisory and enforcement caseload

As of 9 October 2025, the FCA had 76 open supervisory cases tagged as relating to NFM. Given the breadth of behaviours that may constitute NFM and the multiple routes by which intelligence is received, the FCA cautions that this may understate total activity, as one case can cover multiple reports. The current breakdown by market is: Consumer Finance (3), Consumer Investments (11), Digital Assets (1), Insurance (15), Mortgages (2), Payments (6), Retail Banks (11), Wholesale Buy‑Side (9), Wholesale Sell‑Side and Infrastructure & Exchanges (18). There is one open high-profile NFM enforcement case in which a Decision Notice published in March 2025 has been referred to the Upper Tribunal (with a hearing due to take place in March 2026) (see our briefing on this case). The total number of supervisory cases per year shows an upward trend: 123 in 2022, 168 in 2023, 229 in 2024, and 176 in 2025 up to 9 October.

Practical tips for consideration ahead of the festive season

The FCA’s eyes are on governance arrangements within firms and on steps taken by senior managers to avoid and tackle NFM.  This means that, for those in positions of responsibility, managing their own conduct may not be enough to avoid regulatory criticism.  Taking proactive steps to reinforce internal messaging and strengthen governance arrangements may increase the chances of surviving the season without incident and help to avoid wider fallout from any misbehaviour that does arise.  Some actions for consideration include:   

1. Review and update NFM Policies: Re-examine culture and/or ethical policies and employee handbooks to ensure they are current, comprehensive, and reflect the latest regulatory expectations in relation to non-financial misconduct and whistleblowing.
2. Build trust in whistleblowing channels: Foster confidence in whistleblowing and speak-up mechanisms, ensuring they are accessible, trusted, and effective.  This can be achieved through internal campaigns and awareness and also by ensuring that issues raised are appropriately handled and addressed. 
3. Reinforce expected behaviours: Clearly communicate expected standards of conduct to all staff, particularly in the context of social events, and remind employees of the importance of upholding these standards.
4. Clarify reporting routes: Ensure all staff are aware of the channels available for reporting concerns, and that these routes are well-publicised and easy to access.
5. Equip managers to intervene early: Provide managers with guidance and training to identify and address inappropriate behaviour promptly, including during social functions.
6. Review MI and escalation procedures: Confirm that management information (MI) systems and escalation procedures for NFM are functioning effectively, enabling timely and appropriate responses to issues.  Ensure senior management receive meaningful, actionable MI on NFM to support informed decision-making and oversight.
7. Align investigations policies with current regulatory guidance: Ensure investigations policies reflect recent changes and guidance on NFM, including clear thresholds for Conduct Rules reporting, fitness and propriety assessments, and regulatory references.
8. Tailor training to business areas and roles: Consider additional, targeted training on NFM for different business units and roles, ensuring relevance and practical application. Ensure that Conduct Rules (COCON) training includes relevant NFM scenarios and is regularly refreshed. This might also include offering bespoke sessions for senior management, to reinforce their responsibilities under SM&CR to foster a culture where NFM is not tolerated.
9. Monitor regulatory developments: Stay abreast of FCA consultations and, where applicable, other sector-specific material such as Lloyd’s market guidance, so that any updates can be incorporated into policies and training in a timely manner.
10. Address the private/professional life boundary: Explicitly consider and address the boundary between private and professional conduct including how it relates to fit and proper assessments, when updating policies, procedures, training, and escalation processes.
11. Capture NFM in fitness and propriety assessments and regulatory references: Ensure that processes for assessing fitness and propriety, as well as regulatory referencing, appropriately reflect serious, substantiated NFM cases.