Non-financial misconduct in financial services is not new. What is new is the speed at which it has moved from an HR concern to a board-level regulatory risk. The FCA’s Policy Statement PS25/23, published in December 2025, represents the culmination of years of regulatory signalling. Bullying, harassment, and toxic leadership are now conduct rule matters, with consequences that extend from individual fitness and propriety assessments to the reputational standing of entire firms (FCA, PS25/23).
This article examines the evidence, from high-profile failures to regulatory data to academic research, that makes the business case for addressing non-financial misconduct proactively. It also explores why traditional approaches have failed and what a genuinely different model looks like.
The FCA’s journey towards formalising its approach to non-financial misconduct began in earnest with Consultation Paper CP23/20 in September 2023, which initially bundled NFM proposals within a broader diversity and inclusion initiative. In March 2025, the FCA announced it would not pursue the wider D&I work but would press ahead with the NFM-specific proposals (DLA Piper, 2025).
On 2 July 2025, the FCA published CP25/18, confirming that serious non-financial misconduct would be treated as a breach of the Conduct Rules under a new rule, COCON 1.1.7FR. This was followed by the final guidance in PS25/23 on 12 December 2025. The new framework takes effect on 1 September 2026 and extends to approximately 37,000 non-bank firms that were previously out of scope.
The key elements of the framework include:
The new conduct rule defines non-financial misconduct as unwanted conduct that violates a person’s dignity or creates an intimidating, hostile, degrading, humiliating, or offensive environment. This deliberately mirrors but extends beyond the Equality Act 2010 definition of harassment, capturing behaviours that are not linked to protected characteristics (Covington, 2025).
Fitness and propriety assessments now explicitly incorporate NFM. Perpetrators of serious misconduct can fail the fit and proper test. Senior managers who fail to prevent known misconduct can also be found unfit. Private conduct is relevant where it demonstrates a pattern of behaviour or an abuse of a position of trust (Dechert, 2026).
Manager accountability is strengthened. Under COCON 2.1.2R, managers who knew or could reasonably have known about NFM and had the authority to intervene but failed to do so are in breach of the due skill, care, and diligence rule (CMS Law-Now, 2025).
Regulatory references must disclose serious, substantiated personal misconduct, preventing the practice of individuals moving between firms to escape the consequences of their behaviour.
The FCA has stated that this publication brings its policy work on NFM to a close and it will now focus on how firms are tackling it in practice (Linklaters, 2025). This is an important signal. The regulatory conversation is shifting from “what are the rules” to “show us the evidence.”
The FCA’s own data paints a concerning picture of the current state of non-financial misconduct in the sector. A 2024 FCA survey found that bullying, harassment, and discrimination were the most frequently reported forms of NFM, with allegations increasing over the previous three years. Half of all firms identified incidents only through formal grievance processes or whistleblowing channels, and just 43% of reported cases resulted in disciplinary action or another meaningful outcome (FCA, 2024).
The Treasury’s “Sexism in the City” inquiry reported that 45% of workers in financial services had experienced sexual harassment in the workplace (Shoosmiths, 2024). The FCA currently has 76 open supervisory cases tagged as NFM-related, a figure that signals active and sustained regulatory attention.
Beyond the regulatory statistics, the academic and organisational research on the cost of toxic workplace cultures is substantial. Studies consistently show that bullying and harassment lead to increased absenteeism, higher staff turnover, reduced productivity, and elevated mental health costs. For financial services firms, where talent retention is a competitive advantage and client trust is the foundation of the business model, the financial impact compounds rapidly.
Two cases from the financial services sector illustrate with particular clarity what happens when non-financial misconduct is left unchecked.
The collapse of Odey Asset Management (OAM) provides one of the most vivid examples of how non-financial misconduct, tolerated at the top, can destroy a firm. The FCA’s investigation revealed not isolated incidents but a systemic breakdown in culture and governance.
Allegations of sexual misconduct against the firm’s founder, Crispin Odey, were repeatedly downplayed or ignored. Odey used his authority as majority shareholder to dismiss the firm’s executive committee on two separate occasions to halt investigations into his own conduct. The FCA found that this amounted to a fundamental failure of governance, with a single individual effectively placing himself above the firm’s policies and regulatory obligations.
The root cause analysis pointed to what might be called a toxic “star” culture, where the founder’s perceived commercial value overshadowed any concerns about his behaviour. The governance structures were not merely weak. They were actively manipulated by the person they were supposed to hold accountable.
For other firms, the lesson is not just about extreme cases. It is about the cultural conditions that allow those cases to develop. OAM did not fail overnight. It failed over years of small, unchallenged decisions that gradually normalised poor conduct.
The challenges at Lloyd’s of London represent a different pattern – not a single dominant individual, but a deeply entrenched market culture that normalised inappropriate behaviour for decades. A 2019 culture survey commissioned by Lloyd’s revealed widespread bullying, sexual harassment, and excessive alcohol consumption within the market.
The root causes were structural as well as cultural. A fragmented governance model, where numerous independent firms operated within the same market, meant there was no cohesive approach to conduct. Power imbalances between syndicates, brokers, and underwriters made it difficult for junior individuals to challenge senior figures. A “boys’ club” atmosphere had become so entrenched that inappropriate behaviour was routinely dismissed.
Lloyd’s has since undertaken significant reform. But the case demonstrates an important point. Conduct problems that are industry-wide in nature require industry-wide solutions. Individual firms cannot solve structural cultural challenges in isolation.
Most firms respond to conduct challenges with a predictable set of interventions. Updated policies, mandatory training, enhanced whistleblowing procedures, and annual engagement surveys. These are necessary components of any governance framework. They are also, on their own, demonstrably insufficient.
The reasons are well-understood by practitioners, even if they are rarely stated plainly.
Policies describe expected behaviour. They do not change actual behaviour. A 300-page conduct manual that employees sign once a year and rarely consult provides a legal backstop for the firm. It does not create the cultural conditions that prevent misconduct.
Training is periodic and often generic. Compliance training modules tend to focus on extreme scenarios that most employees will never encounter, while the everyday micro-behaviours that normalise poor conduct go unaddressed. A one-hour annual refresher does not equip managers to recognise or intervene in the subtle patterns that the FCA is increasingly concerned about.
Surveys measure perception, not reality. Annual engagement surveys are subject to well-documented biases. Social desirability, recency effects, and fear of identification. They provide a snapshot that may or may not reflect what is actually happening. More importantly, they rely on employees being willing and able to report their concerns, which is precisely the barrier that toxic cultures create.
Whistleblowing is reactive by design. Formal reporting channels are essential, but they only capture misconduct that has already occurred and that someone has decided to report. The FCA’s data showing that 50% of incidents are only detected through these channels tells us that a substantial volume of misconduct is going undetected entirely.
The common thread is that these approaches are all retrospective. They look backwards at what happened, rather than forwards at what is developing. The FCA’s framework, with its emphasis on healthy culture, proactive management, and continuous evidence, requires a fundamentally different approach.
Moving from reactive compliance to proactive conduct management requires three things that most firms currently lack. Objective data about actual workplace behaviours, a framework for interpreting that data in the context of non-financial misconduct, and a mechanism for continuous improvement rather than periodic assessment.
Communication analytics, the analysis of patterns in day-to-day workplace communication, provides an evidence base that traditional tools cannot. By examining metadata rather than message content, communication analytics can reveal patterns of collaboration, isolation, dominance, responsiveness, and inclusion that are invisible to surveys and self-assessments.
This is the approach taken by SolasOS and its leadership development tool, SolasLite. Rather than asking people what they think their culture is like, SolasLite analyses what actually happens in day-to-day communications. The result is objective, continuous, and grounded in real behaviour rather than perception.
For individual leaders, this creates what the Leadership Programme calls “The Mirror Moment” – the point at which a senior leader confronts their own communication data and sees, in objective terms, how their patterns of behaviour shape the culture around them. A leader who considers themselves approachable may discover that their communication data tells a different story. Long messages, low question-asking, and a tendency to close down discussion rather than open it. This moment of honest self-recognition is consistently the most powerful catalyst for genuine behavioural change.
The challenge of defining what good conduct looks like is not one that any single firm can solve alone. Each organisation operates in a specific context, with its own values, risks, and regulatory obligations. But the fundamental questions are shared across the industry. What behaviours constitute good conduct? How should they be measured? What interventions work? How do you demonstrate progress to a regulator?
The Leadership Programme, developed by FinTech-Tables in partnership with SolasOS, addresses this directly. It brings together 5 to 8 financial services organisations in a structured programme that moves through five phases:
A confidential pre-survey and SolasLite data baseline that gives each organisation a private, evidence-based view of its own conduct maturity.
A private organisational workshop where each firm’s leadership team maps its values to measurable communication behaviours, creating a proprietary behavioural framework grounded in its own data.
A multi-firm collaboration session where organisations work with anonymised, aggregated insights to develop shared solutions. Common conduct language, measurement approaches, intervention models, and regulatory evidence strategies.
A cross-industry research report, published jointly by FinTech-Tables and SolasOS, that positions participating organisations as industry leaders in conduct innovation.
An ongoing community of practice that provides sustained benchmarking, quarterly roundtables, and a collective voice on conduct and culture matters.
The programme is designed to produce something no single firm can create alone. An industry-level view of what excellence in conduct actually looks like, grounded in evidence rather than assumption.
The FCA’s framework is not a one-off compliance exercise. The regulator has made clear that it will be supervising how firms tackle NFM in practice, which means firms need to demonstrate ongoing progress, not just a point-in-time policy update.
Continuous behavioural data provides the foundation for this. Rather than assembling evidence before an audit, firms that adopt communication analytics generate compliance-relevant data as a natural byproduct of daily operations. Trends in cultural health, team dynamics, leadership communication patterns, and collaboration metrics can be tracked over time, providing the longitudinal evidence the FCA expects.
For firms participating in the Leadership Programme, the community of practice extends this further. Ongoing benchmarking against anonymised cohort data provides a continuous, objective view of where each organisation stands relative to its peers. This is not a competitive ranking but a shared tool for raising the bar across the industry.
Non-financial misconduct is the defining conduct challenge of this regulatory era. The firms that treat it as another compliance box to tick will find themselves perpetually catching up. The firms that treat it as an opportunity to genuinely understand and improve their cultures will find themselves ahead of the curve, better positioned with regulators, more attractive to talent, and more resilient in the face of the inevitable cultural challenges that every organisation faces.
The September 2026 deadline is six months away. For many firms, the immediate priority is ensuring they meet the basic requirements. Updated policies, delivered training, revised fitness and propriety processes. These are important steps.
But the firms that will lead this conversation, the ones that regulators point to as examples of what good looks like, will be the ones that went further. They invested in objective behavioural data. They gave their leaders a genuine mirror. They collaborated with their peers to develop standards that were richer and more credible than anything they could have built alone. And they committed to continuous improvement, not because the regulator demanded it, but because they understood that how you treat your people is how you run your business.
The question is not whether your firm will comply with the new rules. It is whether you will lead the conversation about what comes next.
Applications are now being accepted for the Non-Financial Misconduct Leadership Programme from FinTech-Tables and SolasOS, designed for financial services organisations preparing for the next phase of regulatory change.
To learn more, visit https://fintech-tables.com/events/non-financial-misconduct-leadership-programme/
I specialise in bringing about change and behaviourally-led growth at organisation, team and individual level.
After 13 years in FS at what is now Aviva, I emerged as an ACII, MBA and senior manager from its multiple mergers. I was determined to apply my learning from these transformative changes to help people and organisations grow through disruption.
24 years later, my work in that has taken me to 15 countries across multiple sectors, including Financial Services.
My businesses in Leadership (Actif4) and Change (Initiate) challenge people and organisations to be future-focused, spiced with applied learning from the past.
With SolasOS, alongside Iain Hamilton, the next stage of development is underway — applying next-gen technology in providing deep insight on very human challenges — all to help people and their organisations to grow and bring about successful change.
It is great to see the Financial Services embracing the FinTech sector, and I am excited by the potential that we bring with Solas-OS to broaden the FinTech impact more fully across Financial Services’ people and cultures.
