PS25/23: Tackling non-financial misconduct in financial services
Executive Summary
The FCA's PS25/23 finalizes guidance on tackling **non-financial misconduct (NFM)** in financial services, amending the COCON sourcebook to clarify how serious NFM breaches conduct rules and integrating it into FIT assessments for fitness and propriety. This matters because it aligns rules across banks and non-banks, enhances accountability, deters harmful workplace cultures, and supports FCA objectives like consumer protection and market integrity by ensuring consistent handling of issues like bullying or harassment. #
What Changed
- COCON amendments: Expands scope to non-banks for work-related serious NFM involving financial services personnel; provides flowcharts, examples, and factors (e.g., seriousness, pattern, dishonesty, violence) to assess breaches consistently; clarifies only "serious" NFM qualifies, aligned with Equality Act concepts, and excludes trivial/private matters. - FIT sourcebook updates: Integrates NFM into fit and proper tests for employees/senior personnel; firms assess case-by-case without investigating implausible claims or breaching privacy; removes disproportionate examples like minor motoring offenses. - Managerial accountability: Relative to knowledge/authority under ICR2; no expansion into purely private life. - Minor tweaks from CP25/18 feedback: New diagrams, employment law alignment, w
What You Need To Do
- Review and update policies/handbooks to incorporate COCON/FIT guidance on NFM assessment, including flowcharts and factors for breaches/fitness
- Train HR, compliance, and managers on applying rules consistently, emphasizing seriousness thresholds, case-by-case judgement, and alignment with employment law/privacy
- Enhance regulatory reference processes to disclose past NFM; ensure reporting of serious breaches to FCA
- Assess current NFM handling for gaps (e
- Firms not to investigate trivial/improbable allegations or overstep privacy laws
Key Dates
Compliance Impact
Urgency: High – With rules effective 1 September 2026 (9+ months from today), firms have preparation time, but PS25/23 closes FCA's NFM policy work, shifting to supervision/enforcement focus; non-compliance risks enforcement, FIT failures, and reputational damage amid trust-building priorities in FCA Strategy 2025-2030.
Who is Affected
Summary
Policy statements