On 12 December 2025, the FCA published a policy statement, confirming its final guidance on non-financial misconduct, following a consultation earlier this year.

In July 2025, the FCA updated its rules on how financial services firms should address non-financial misconduct. The new rules confirmed that, for non-banks, serious bullying, harassment or violence amount to Conduct Rule breaches in respect of which the FCA may take enforcement action, thereby aligning conduct rules which apply to non-banks with those which already apply to banks. At the same time, the FCA published a consultation paper on proposed accompanying guidance setting out how the new rules should apply to all SMCR firms. We set out further details of these changes and commentary in our RIFC Insights blog post.

That proposed guidance has now been confirmed after 95 per cent of those who responded to the FCA's consultation agreed that the additional guidance would help them to take action. Like the new rules, the accompanying guidance will come into force on 1 September 2026.

The guidance covers how firms should apply the new rules and the factors that they should consider when assessing whether someone is fit and proper for their role. It makes clear that the Conduct Rules do not cover individuals' private and personal lives, and that the FCA does not expect firms to monitor employees' private lives to identify anything relevant to fitness. The guidance contains a non-exhaustive list of criteria and scenarios aimed at assisting firms with identifying where individuals' work, and where personal and private lives, begin and end for these purposes. For example, misconduct by a Conduct Rule staff member in relation to a fellow member of the workforce at a social occasion organised by their firm would be in scope, but misconduct in relation to a fellow member of the workforce at a social occasion organised by them in their personal capacity would not be in scope. Distinguishing between events organised in a personal capacity and work events (e.g. "after-parties" after a work event) will be difficult in some cases, and will often present challenges for firms seeking to investigate potential breaches.

The guidance indicates that firms are not expected to actively enquire into employees' personal or private lives. However, it reminds firms that misconduct in a person’s personal or private life may be relevant to an assessment of fitness and propriety. Where firms do become aware of information which, if substantiated, would call into question employees' fitness and propriety, they must consider what they can do to assess this possible impact. The guidance adds that this may be the case even where the behaviour does not involve a breach of standards that are equivalent to those required under the regulatory system and/or there is little or no risk of that behaviour being repeated in the individual's work for their firm. The FCA had previously indicated that this would be the case if the individual's behaviour was "disgraceful or morally reprehensible or otherwise sufficiently serious". The guidance now refers more neutrally to "willingness to: (i) disregard ethical or legal obligations; (ii) abuse a position of trust; [or] (iii) exploit the vulnerabilities of others" as indicators of conduct which could, if sufficiently serious, have a bearing on an individual's fitness and propriety.

Reflecting feedback provided through the July consultation, the FCA has made some relatively minor changes to the text on which it consulted, namely to:

• more closely align it with employment law;
• clarify that managers' accountability is relative to their knowledge and authority;
• clarify that firms are not expected to investigate trivial or implausible allegations;
• clarify that there is no requirement for firms to breach privacy law; and
• include some additional examples and flow charts.

As explained in the policy statement, the guidance is intended to "help firms make fair, consistent decisions and take decisive action when standards are breached". However, the FCA makes clear that "firms will always need to exercise judgement" and that the "primary responsibility for preventing NFM, and dealing with it when it occurs, rests with firms themselves".

With the new rules and guidance coming into force in September 2026, firms now have an opportunity to review their relevant frameworks and processes and refresh their Conduct Rules training. 

For further analysis of the finalised guidance, and of the FCA's approach to regulating non-financial misconduct, please see our Clifford Chance briefing.