Mortgage brokers, lenders and other regulated firms will have to tighten their internal conduct policies after the Financial Conduct Authority (FCA) confirmed new rules bringing non-financial misconduct formally within the scope of its conduct regime.
The regulator said the changes, which come into force on 1 September 2026, are designed to tackle behaviour such as bullying, harassment and violence in financial services workplaces, warning that misconduct of this kind can damage confidence in the sector as well as harm individuals and firms.
Under the new rules, the FCA will extend the Code of Conduct (COCON) requirements in non-bank firms, including mortgage intermediaries, to cover serious misconduct between colleagues where there is a clear link to a person’s professional role.
A new rule – COCON 1.1.7FR – will allow disciplinary action to be taken where behaviour such as harassment or abusive conduct is connected to an individual’s work, even if the behaviour itself is not financial in nature.
NEW GUIDANCE
The regulator said the change does not widen its remit beyond activities already covered by the Senior Managers and Certification Regime (SM&CR), and will not apply retrospectively.
Alongside the rule change, the FCA has issued new guidance under policy statement PS25/23 clarifying how firms should take non-financial misconduct into account when assessing whether staff remain fit and proper to perform regulated roles.
The guidance confirms that firms may consider behaviour outside the workplace, including social media activity, when carrying out fitness and propriety assessments, but only where it is relevant and proportionate.
Firms are not expected to monitor employees’ private lives or revisit historic decisions.
It also makes clear that firms are not expected to monitor employees’ private lives or revisit historic decisions, and should not take action that conflicts with employment law, privacy rules or other legal obligations.
Before the new requirements take effect, firms are expected to review staff policies, breach reporting procedures, regulatory reference processes and fitness and propriety assessments to ensure they reflect the updated approach.
The FCA said the changes were strongly supported during consultation and are intended to give firms greater clarity on how to deal with misconduct issues without needing extensive external legal advice.
