NFM in UK Financial Services
Non-Financial Misconduct, encompassing behaviours such as bullying, harassment, and discrimination, has become a focal point for regulatory bodies in the UK financial services industry. The Financial Conduct Authority (FCA) has emphasised that non-financial misconduct falls within its regulatory remit, underscoring the importance of maintaining high standards of character and propriety among industry professionals.
The Financial Conduct Authority (FCA) and the Treasury Select Committee (TSC) recently published findings on non-financial misconduct in the financial sector. The FCA conducted a comprehensive survey of over 1,000 investment banks, brokers, and wholesale insurance firms to understand how these firms record and manage allegations of non financial misconduct.
Key findings from the survey include:
The number of reported non-financial misconduct incidents increased between 2021 and 2023.
Bullying and harassment (26%) and discrimination (23%) were the most frequently recorded concerns.
Firms identified incidents through various mechanisms, including internal systems, formal processes, and whistleblowing.
Disciplinary actions were taken in 43% of cases, while other outcomes included ongoing investigations, cases not being upheld, or not investigated.
The FCA emphasised the importance of fostering healthy workplace cultures and highlighted that non-financial misconduct can undermine trust and confidence in the financial sector.
Timeline for Regulated Firms
Mid-2025: Firms will be required to review and update their policies and procedures to align with the new regulations.
Late 2025: Firms must begin implementing the updated policies and conduct training programs for employees.
Early 2026: The FCA will conduct a review to assess compliance and gather feedback from firms.
Mid-2026: Firms should have fully integrated the new measures and reported any incidents of non-financial misconduct.
Insurers and intermediaries must take proactive steps to address non-financial misconduct. This includes implementing robust policies and procedures to detect and handle incidents, fostering a culture of psychological safety, and ensuring thorough investigations happen when they need to. Regular training and awareness programs are essential to educate employees about acceptable behaviours and the consequences of misconduct.