Jurisdiction(s):
United Kingdom

FCA non-financial misconduct reforms and Worker Protection Act: practical steps for UK-regulated firms on policies, data/NDAs, reporting, investigations, disclosure, remediation and culture

Published on: 09 May 2024

Published by a LexisNexis Financial Services expert

Legal News

Article summary

Legal and regulatory developments

At present, non-financial misconduct is still not explicitly referenced in the fitness and propriety assessment for those holding a Senior Management Function (SMF) or a Certification Function (CF), nor within the broader conduct rules applied more widely to staff and employees across firms. Nonetheless, the FCA has pursued non-financial misconduct cases, despite criticism arising from its action against John Frensham. Heard by the Upper Tribunal in 2024, that case created a benchmark for fitness and propriety assessments, confirming there must be a meaningful link or nexus between the misconduct and the individual’s role in financial services.

The FCA’s September 2023 consultation proposed expressly bringing non-financial misconduct into the regulatory framework. In particular:

bullying in the workplace is pertinent and relevant to fitness and propriety, and comparable conduct in a person’s private life is also relevant
explicit conduct rules addressing and covering serious bullying and harassment of colleagues
including discriminatory practices (for example, sexually or racially motivated offences) and also any adverse findings against connected persons within firms’ suitability criteria

In February 2024, the FCA launched an information-gathering exercise (targeting insurers), aimed at insurers, on non-financial misconduct, including the use of Non-Disclosure Agreements (NDAs). It is anticipated...

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