The FCA Consultation Paper (CP 25/18) on 'Tackling non-financial misconduct [NFM] – some complex rules to decipher!!!

The FCA has published a Consultation Paper (CP 25/18) on 'Tackling non-financial misconduct [NFM] in financial services' which proposes issuing guidance in how firms can determine whether particular types of misconduct will breach its rules.

The Foreword of the FCA's paper, written by the recently-appointed Deputy Chief Executive, states that:

• "There is an important role for regulators to play in tackling these issues.
• This includes making sure that steps are taken to prevent ‘rolling bad apples’ .
• people moving from firm to firm without appropriate action being taken or without past serious non-financial misconduct being disclosed."

The FCA paper includes a Policy Statement amending the Conduct Rules (the COCON section of the FCA Handbook) to bring more instances of NFM within its regulatory remit, effective from 1 September 2026.

The following shows some of the complexities of compliance:

Further to the above here's an excerpt from those revised COCON rules:

• "COCON 1.1.5BR:
  • (1) The restrictions of the scope of COCON in COCON 1.1.7AR to COCON 1.1.7FR (when they apply) are in addition to those in COCON 1.1.6R to COCON 1.1.7R.
  • (2) The restrictions of the scope of COCON in COCON 1.1.7AR to COCON 1.1.7FR (when they apply) are cumulative.
    •  (1) The effect of COCON 1.1.5BR(1) is that:
      • (a) conduct that is not excluded from the scope of COCON by COCON 1.1.7AR COCON 1.1.7FR but is outside the scope of COCON 1.1.6R to COCON 1.1.7R is outside the scope of COCON.
      • (b) conduct that is excluded from the scope of COCON by one of the rules in COCON 1.1.7AR to COCON 1.1.7FR but is within the scope of COCON 1.1.6R to COCON 1.1.7R is outside the scope of COCON.
    • (2) The effect of COCON 1.1.5BR (2) is that conduct of a member of the conduct rules staff of a firm:
      • (a) is outside the scope of COCON even if it is excluded by only one of the rules in COCON 1.1.7AR to COCON 1.1.7FR and
      • (b) is outside the scope of:
        • (i) Rule 4 in COCON 2.1 (You must pay due regard to the interests of customers and treat them fairly) even if the only rule excluding it is COCON 1.1.7ER; and
        • (ii) Rule 6 in COCON 2.1 (You must act to deliver good outcomes for retail customers) even if the only rule excluding it is COCON 1.1.7CR."
  • (the above is also extracted below)

Sources

https://www.fca.org.uk/news/press-releases/fca-expectations-bullying-harassment-violence-deepen-trust-financial-services

https://www.fca.org.uk/publication/consultation/cp25-18.pdf