On 2 July 2025, the FCA finally issued its long-awaited next steps document (CP25/18: Tackling non-financial misconduct in financial services) on the proposed new guidance on non-financial misconduct (NFM). 

The document contains two key elements:

Rule Change from 1 September 2026 – The FCA will extend its Code of Conduct Rules (COCON) to non-bank firms, following strong support from its consultation (CP23/20). This change aims to address ambiguity around conduct breaches (e.g., serious bullying or harassment) in non-banks and will bring about 37,000 additional regulated firms into scope. However, entities without a Part 4A permission (e.g., payment firms, e-money institutions, investment exchanges, and credit rating agencies) will remain outside the scope.

Consultation Open Until 10 September 2025 – The FCA is consulting on new guidance in its Handbook to help SMCR firms better understand and apply conduct rules and fitness/propriety standards. Feedback is sought by 10 September 2025, with final guidance expected by year-end.

Key Takeaways

• Non-bank firms must prepare for 1 September 2026: From this date, the COCON will apply to non-banks, making NFM a regulatory concern for around 37,000 additional firms. Although not retrospective, affected firms should review current policies and conduct internal risk assessments to ensure future compliance.
• The FCA is seeking industry input: The FCA now appears more cautious, acknowledging the difficulty of defining NFM exhaustively and inviting views on whether proposed Handbook guidance would help. Any further guidance will only proceed with clear support from stakeholders.
• Engagement is essential: The consultation is open until 10 September 2025. We encourage all affected firms to respond and contribute to shaping the final framework. We are preparing a coordinated response and welcome collaboration or queries.
• Renewed focus on culture: Following the withdrawal of its D&I proposals in March, the FCA is reaffirming its commitment to workplace culture by targeting NFM as a regulatory issue. This includes efforts to deter harmful behaviour and prevent the rehiring of repeat offenders through strengthened regulatory references.
• Ongoing uncertainty around scope and process: NFM remains a legally and practically complex area, particularly where regulatory expectations intersect with employment law. Vague definitions risk over-reporting or misuse, while a lack of clarity on process – especially how the FCA will assess fitness and propriety – leaves important questions unanswered.
• Full guidance is still awaited: The full guidance is still awaited, and it is understood this will land at the end of 2025. All affected firms by the NFM regime should monitor developments on the Handbook and any further guidance and, where needed, seek advice in the interim.

For a more comprehensive assessment please refer to our PDF Insight.