UK Financial Firms Prepare for Non-Financial Misconduct Rules

UK financial firms are stepping up preparations for the Financial Conduct Authority’s (FCA) expanded requirements regarding non-financial misconduct, as reported by The Guardian.

The changes, which take effect in September, will extend rules already applied in banking to nearly 40,000 additional firms, including hedge funds, investment managers, insurers, and brokers subject to the Senior Managers and Certification Regime. Firms will be expected to report serious non-financial misconduct to the FCA and include relevant findings in regulatory references provided to prospective employers. The rules cover conduct including bullying, harassment, racism, violence, and intimidation, and are intended in part to prevent individuals from moving between firms without serious misconduct being disclosed.

Jill Lorimer, a partner at Kingsley Napley, said firms dealing with current allegations may seek to complete investigations before the new regime takes effect. She also warned that the FCA may look for early cases to demonstrate its willingness to enforce the rules. “The City should take these changes very seriously indeed, as no firm will want to be the target of high-profile regulatory attention,” Lorimer said.

An FCA spokesperson said unaddressed bullying, harassment, or violence can raise wider questions about a firm’s culture and undermine confidence in financial services. “Our rules and guidance will help industry take a more consistent approach,” the spokesperson said. “But the primary responsibility for preventing and dealing with this behaviour remains with firms.”