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December 12, 2025
The FCA has published Policy Statement PS25/23 confirming its final guidance to tackle serious non-financial misconduct in financial services. In July, the FCA changed its COCON rules to more closely align the rules for banks and ‘non-banks’ (so all firms). At the same time, the FCA asked firms if they wanted additional guidance to help them take action – and said it would only publish this if they did. 95% of those who responded to the consultation agreed, so the FCA is now providing this final guidance.
- The FCA is amending its Code of Conduct (COCON) sourcebook to explain how NFM can be a breach of the conduct rules. This will make it easier for firms to interpret and consistently apply FCA rules. The FCA also confirms how NFM forms part of the Fit and Proper test for Employees and Senior Personnel (FIT).
- There is a new COCON 1.3 (over 9 pages and 17 items of Guidance) and a new COCON 1 Annex 2 (over 8 pages and 21 items of Guidance, including several flowcharts).
- There are new items of Guidance in COCON 4.1 and 4.2, and a new COCON 4.3 (with an Annex) providing 48 new items of Guidance over six pages.
- In relation to fitness and propriety, there are 15 new items of Guidance added to FIT 1.3, with other additions made to FIT 2.1 and 2.2.
- ‘Non‑financial misconduct’ includes a wide range of behaviour, essentially any misconduct not of a clearly financial nature. It is not possible to list all types of misconduct that might amount to a breach of COCON (or of fitness standards in FIT), as each case requires individual judgement based on its specific circumstances.
- The FCA used the words ‘bullying’ and ‘harassment’ in the Consultation Paper as shorthand terms to describe unwanted conduct that has the purpose or effect of violating a colleague’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for them.
- The guidance is designed to help firms make fair, consistent decisions when standards are breached. This change will help promote healthy and inclusive workplace cultures.
- The guidance covers how firms can apply FCA rules on minimum standards of behaviour for financial services employees, and the factors they should take into account when assessing whether someone is fit and proper for their role.
- The FCA has made some small changes to address the main areas of feedback:
- New examples and flow charts to support the application of the new rule.
- Clearer alignment with employment law.
- Clarification that managers' accountability is relative to their knowledge and authority.
- Clarification that firms are not expected to investigate trivial or implausible allegations or breach privacy law.
- The guidance will come into force on 1st September 2026 at the same time as the new rule at COCON 1.1.7FR. See Chapter 2 of CP25/18 (PDF) for more information on the rule.
