On 12 December 2025, the Financial Conduct Authority (FCA) published its final guidance on non‑financial misconduct (NFM) in financial services in Policy Statement PS25/23. In summary, the FCA is:

(i) amending its Code of Conduct (COCON) sourcebook to explain how NFM can be a breach of the conduct rules and make it easier for SMCR firms to interpret and consistently apply the rules; and

(ii) explaining how NFM forms part of the Fit and Proper test for Employees and Senior Personnel (FIT) sourcebook.

This new guidance will come into force on 1 September 2026.

Background

By way of background to PS25/23, in July 2025, in CP25/18, the FCA stated that it was expanding the scope of COCON in non-banks with effect from 1 September 2026 to more closely align the rules on NFM in banks and non-banks. At the same time, the FCA consulted on new guidance for banks and non-banks to assist in applying COCON and FIT in relation to NFM with responses due by 10 September 2025. The FCA stated that it would only publish the proposed guidance if there was clear support for it – recognising the increased costs of implementation and noting that guidance cannot cover every situation (for further detail on CP25/18, see our previous briefing here).

PS25/23 explains that feedback to the guidance consultation was extremely positive, with 95% of respondents requesting the FCA to make guidance in this area. The FCA is therefore publishing the guidance proposed in CP25/18 now, with minor amendments to reflect consultation feedback.

Changes from CP25/18

The amendments to the guidance to reflect consultation feedback include:

  • new examples and flow diagrams to help apply COCON consistently;
  • clearer alignment with employment law;
  • clarifying that managers’ accountability is relative to their knowledge and authority;
  • withdrawing or amending examples and factors that risked imposing disproportionate burdens; and
  • clarifying that firms are not expected to investigate trivial or implausible allegations or breach privacy law when assessing fitness and propriety.

The FCA emphasises that no guidance can cover every scenario and that firms will always need to exercise judgement.

Next steps

In terms of next steps, all firms affected by these changes should familiarise themselves with the new guidance at Appendix 1 of PS25/23.

The FCA states that this publication brings its policy work on NFM to a close. It will now focus on how firms are tackling it in practice.

The paper also confirms that the Prudential Regulation Authority is not taking forward any of the proposals in its 2023 consultation (CP18/23), including those on staff fitness and propriety. Instead, it will expect dual-regulated firms to consider the FCA’s guidance when assessing these.