This press release was covered in City AM, Money Marketing, Personnel Today, This is Money, Law360 and The Banker.
Reports of breaches of conduct submitted to the Financial Conduct Authority (FCA) by financial services firms increased by 10% to 4,224* in 2024 ** from 3,843 the previous year, says Littler, the specialist employment law firm.
A breach of conduct occurs when an employee breaches one or more of the FCA’s specific “Conduct Rules” which set minimum standards of individual behaviour in financial services, such as the duty to act with integrity, due skill, care and diligence and in the best interests of clients. Misconduct reports can cover issues such as misleading clients and giving a client negligent advice, and in recent years, firms have had to carefully consider whether non-financial misconduct may also be caught as a potential Conduct Rule breach.
Since the start of the “#MeToo” movement towards the end of the last decade, the FCA has made clear to regulated firms that non-financial misconduct, such as sexual harassment, may be relevant to their assessments of whether regulated persons are fit to undertake their regulated roles and may also be reportable to the regulator.
Recent misconduct-related scandals, including the cases of Crispin Odey and Jes Staley, have heightened awareness amongst financial services firms of both the reputational risk and regulatory risk of failing to adequately deal with non-financial misconduct.
As a result, firms are becoming more vigilant in investigating and dealing with allegations of inappropriate behaviour in the workplace, reporting issues that they might previously have considered borderline or not worthy of disciplinary action. Alongside this, at the end of last year, the FCA finalised its long-awaited guidance on non-financial misconduct, which will come into force in September 2026.
Sophie Vanhegan, Partner at Littler, explains: “With the increased focus on non-financial misconduct and broader workplace culture over the past few years, very few financial services firms are willing to take chances over allegations of misconduct by their staff.”
“They know that properly investigating allegations of misconduct, and where appropriate, timely reporting to the regulator, is key to maintaining a healthy workplace culture and supporting a strong relationship with the regulator, as well as putting them in a strong position from a reputational standpoint if news of the misconduct gets into the public domain.”
With the finalising of the new guidance on non-financial misconduct by the FCA, including the introduction of a new “anti-harassment” rule in the Code of Conduct, firms now have greater clarity from the regulator on how the FCA expects allegations of non-financial misconduct to be handled and when it may have regulatory implications.
“The new guidance from the FCA provides welcome assistance for firms in distinguishing between matters that require regulatory escalation and those that may be more appropriately addressed solely through internal processes,” Sophie said.
* The total number of reports included forms by firms regarding Senior Manager Function holders (Form C&D), which increased to 37 from 36, and forms reported regarding conduct rules staff (REP008), which rose to 4,187 from 3,807.
**Data received by FCA with a year-end of March 31, 2025.
ENDS
About Littler
Littler is the largest global employment and labour law practice, providing workplace solutions that are local, everywhere. With over 1,800 lawyers in more than 95 offices worldwide, Littler represents management in all aspects of employment and labour law.
We partner with clients to understand their culture and business objectives, offering practical recommendations tailored to their risk appetite. Our team comprises top-class lawyers with significant experience, providing honest advice through a single point of contact. Specialising in complex, multi-jurisdictional issues, our client base spans financial services, technology, healthcare, professional services, and luxury goods.
Littler’s international offices cover North America, South America, Asia, and Europe, including Austria, Belgium, Brazil, Canada, Colombia, Costa Rica, the Dominican Republic, El Salvador, France, Denmark, Germany, Guatemala, Honduras, Ireland, Italy, Mexico, the Netherlands, Nicaragua, Norway, Panama, Portugal, Puerto Rico, Singapore, Spain, Switzerland, the United Kingdom, and Venezuela.
Littler is recognised as a leader in its field by both Chambers & Partners and Legal 500.
Littler United Kingdom and Littler Ireland are part of Littler Global, which operates worldwide through separate legal entities.
