The Financial Conduct Authority (FCA) is the regulatory body responsible for ensuring that financial markets operate in a fair, transparent and honest manner. As part of its remit, the FCA is also responsible for preventing and detecting misconduct in the financial industry. While financial misconduct is well-known, non-financial misconduct is a growing concern for the FCA.
Non-financial misconduct is any behaviour that goes against the values and principles of an organisation, and that has the potential to cause harm to individuals or the reputation of the organisation. This type of misconduct can take many forms, including harassment, discrimination, bullying, and even physical violence. While non-financial misconduct may not have a direct financial impact on an organisation, it can have serious consequences for the wellbeing of its employees, customers, and stakeholders.
The FCA has been taking a proactive approach to non-financial misconduct in recent years. In 2019, it published a discussion paper on the topic, which highlighted the risks associated with non-financial misconduct and proposed a number of measures to prevent and address it. The FCA has also made it clear that it expects firms to take responsibility for preventing and addressing non-financial misconduct, and that it will take action against firms that fail to do so.
One of the key challenges with non-financial misconduct is that it often goes unreported. Victims may fear retaliation, may not be aware of their rights, or may feel that their concerns will not be taken seriously. The FCA has recognised this issue and has called on firms to create a culture where employees feel safe to raise concerns and where those concerns are taken seriously and dealt with appropriately.
To prevent and address non-financial misconduct, the FCA has proposed a number of measures.
These include:
The FCA has also emphasised the importance of diversity and inclusion in preventing non-financial misconduct. A lack of diversity can create an environment where non-financial misconduct is more likely to occur, and can also make it more difficult for victims to speak out. The FCA has called on firms to prioritise diversity and inclusion, and to take steps to ensure that their workplaces are inclusive and free from discrimination.
Non-financial misconduct is a growing concern for the FCA, and for the financial industry as a whole. While it may not have a direct financial impact, it can have serious consequences for the wellbeing of individuals and the reputation of organisations. The FCA has proposed a number of measures to prevent and address non-financial misconduct, and has emphasised the importance of creating a culture where employees feel safe to raise concerns and where those concerns are taken seriously and dealt with appropriately. It is up to firms to take responsibility for preventing and addressing non-financial misconduct, and to create workplaces that are inclusive, respectful, and free from discrimination.
Jeremy Gordon is able to provide unique insight and expertise in advising on non-financial misconduct. Our Head of Financial Services Regulation was an FCA enforcement lawyer who advised on individual fitness and propriety in relation to numerous authorisation applications, including those of individuals with non-financial misconduct findings. We can advise firms on how to ensure that its regular employee recruitment programme identifies potential risks arising from conduct of prospective employees, as well as provide advice and representation in response to an FCA Authorisations enquiry in relation to alleged non-financial misconduct of present employees.