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Fund management companies have been urged to begin adapting their operations early  as the Financial Conduct Authority (FCA), the UK financial services watchdog, prepared to introduce tougher regulations targeting bullying, harassment, and other serious non-financial misconduct.

The new rules, set to take effect from September 1, 2026, expanded the FCA’s existing Code of Conduct and Fit and Proper Test to explicitly cover behaviours that had previously flown under the regulatory radar.

This shift was particularly significant for operations teams within fund managers, which play a vital role in upholding internal compliance and workplace standards.

The financial services sector has long been accused of an environment where many issues around staffing plague organisations.

Elsewhere, at the same time, the UK government has announced an incoming ban on the use of non-disclosure agreements (NDAs) to silence employees who have suffered harassment and discrimination in the workplace as part of the government’s overhaul of workers’ rights.

With the FCA increasingly viewing non-financial misconduct as a key warning sign of toxic corporate culture, operations professionals were being told to take a proactive approach to embedding new expectations throughout their firms.

The FCA said the new rules will align the conduct rules in banks and non-banks for cases of serious non-financial misconduct.

Their list of changes include:

• Giving organisations confidence to take robust action against serious misconduct by clarifying that behaviours such as bullying, harassment, and discrimination — even outside the workplace — can amount to breaches of conduct rules and impact an individual’s fitness and propriety.
• Driving consistency across the financial sector by applying the same standards of personal and professional conduct to all regulated firms, removing the ambiguity that previously existed between banking and non-banking sectors.
• Providing a clearer framework for identifying when non-financial misconduct constitutes a regulatory breach, through the expansion of the Individual Conduct Rules and Fit and Proper Test. This includes assessing misconduct using both subjective and objective standards, and ensuring such cases are properly reflected in regulatory references.

Industry urges action as FCA deadline nears

“The industry had already pushed for more on these changes,” said Erin Sims, Financial Services Senior Analyst at RSM UK. “Financial services firms were being told to do more to address workplace behaviours that impacted culture and conduct.”

“Changing the culture of a firm takes significant time

and effort; there is no short-term fix."

Sims stressed that the clock was ticking. “Changing the culture of a firm takes significant time and effort; there is no short-term fix,” she said. “That was the ideal time for firms to start reviewing practices in line with updated rules.”

She highlighted that the FCA’s broadening of the Code of Conduct and Fit and Proper Test to include bullying, harassment, and violence brought much-needed clarity for non-banking firms that had previously operated under a narrower set of expectations.

For operations teams, this meant an increased focus on reviewing and updating internal polices to explicitly address non-financial misconduct.

Experts recommended that organisations begin by:

• Reviewing conduct policies, HR procedures, and training programmes to align with the expanded regulatory scope.
• Embedding non-financial misconduct expectations into performance management, leadership development, and whistleblowing frameworks.
• Ensuring robust documentation and fair disciplinary processes to meet the FCA’s heightened scrutiny on regulatory references.
• Providing targeted training for senior managers, HR teams, and line managers to understand the new conduct rules and the criteria for assessing misconduct.

Sims also pointed out that while these changes might involve significant compliance costs, the long-term benefits – including improved workplace culture and reduced reputational risk – were likely to outweigh the challenges.

“Firms that went beyond compliance and actively championed positive workplace cultures would not only meet regulatory expectations but also position themselves as employers of choice in a competitive talent market,” she added.

As fund managers’ operations teams geared up for these new requirements, the message was clear: early and proactive engagement with culture and conduct reforms was key to navigating the FCA’s evolving regulatory landscape successfully.

 

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