Non-financial misconduct is now a regulatory issue – FCA publishes final guidance

The FCA has published its final guidance on non-financial misconduct (PS25/23), setting out how it expects FCA-regulated firms to deal with serious non-financial misconduct, and the message is clear:
👉 Behaviour outside the workplace can still have regulatory consequences under the FCA Conduct Rules.

This isn’t about box-ticking or virtue signalling. It’s about whether misconduct calls into question a person’s fitness and propriety, integrity and reputation and whether firms are taking those assessments seriously from a regulatory compliance perspective.

If you’re an FCA-authorised firm, SMCR-regulated business, or scaling fintech, this is guidance you need firmly on your radar.

What does the FCA mean by “non-financial misconduct”?

Non-financial misconduct, as defined in the FCA guidance, refers to serious behaviour that doesn’t directly involve financial wrongdoing, but which may still undermine trust in the individual or the firm and raise FCA fitness and propriety concerns.

The FCA specifically points to conduct such as:

• sexual harassment or assault;
• bullying, intimidation, or discrimination;
• violent or abusive behaviour; and
• criminal conduct unrelated to financial services.

Importantly, this can include conduct outside work, where it raises questions about:

• honesty, integrity, or reputation;
• whether the individual can be trusted in a regulated role under SMCR; or
• whether the firm’s culture, governance and controls are effective.

This FCA guidance applies across the board, including to senior managers, certified staff and non-executive directors, making it highly relevant for firms operating under the Senior Managers & Certification Regime.

What’s changed under the FCA guidance?

In short: less ambiguity and higher expectations for FCA-regulated firms.

The FCA has clarified that:

• serious non-financial misconduct can amount to a Conduct Rules breach;
• firms are expected to investigate, assess and act where such issues arise; and
• ignoring or minimising this behaviour can itself be a regulatory failure.

The FCA is also clear that it’s not asking firms to become moral arbiters. However, it is expecting firms to make reasoned, well-documented decisions about whether misconduct impacts regulatory fitness and propriety.

Why this matters for FCA-regulated firms and fintechs

This guidance has real-world consequences for FCA-authorised and SMCR-regulated businesses:

• Fitness and propriety assessments must properly factor in non-financial misconduct
• Disciplinary processes need to be robust, fair and well-documented
• Regulatory references must accurately reflect serious findings
• Culture and governance are firmly in scope, tone from the top matters

For founders and leadership teams at fintech and financial services firms, this is also a personal issue. Behavioural issues at senior level are far more likely to attract FCA scrutiny and enforcement risk.

What should firms be doing now?

A quick FCA-aligned checklist:

✅ Review conduct policies and disciplinary frameworks
✅ Ensure HR and compliance teams are aligned
✅ Train managers on when issues escalate to regulatory relevance
✅ Revisit SMCR fitness and propriety processes
✅ Stress-test how you’d handle allegations involving senior leadership

And critically: document your decision-making. The FCA cares as much about how you reached a conclusion as the conclusion itself.

💥 Bottom line

The FCA is signalling that culture, behaviour and accountability are not “soft issues” — they are core regulatory concerns.

For firms that get this right, it’s an opportunity to:

• strengthen governance;
• reduce FCA regulatory risk; and
• build credibility with regulators, investors and staff.

Handled badly, it’s a fast track to FCA enforcement action and reputational damage.

Need help reviewing conduct policies, SMCR exposure or handling a sensitive non-financial misconduct issue?

That’s exactly what we do at Founders Law - helping ambitious financial services and fintech businesses navigate FCA regulation without losing momentum 💛

Want to know more? Get in touch.

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