Non-Financial Misconduct: The FCA's New Enforcement Priority That Every IFA Needs to Understand
In January 2026, Therese Chambers, the FCA's co-executive director of enforcement, made something explicit that many advisers had been wondering about: the regulator will not rule out enforcement action over non-financial misconduct.
This isn't theoretical. The FCA has been building towards this position for years, and recent data shows 41% of conduct breaches now fall under categories that would be caught by the incoming conduct rules. If you're running an advice firm, this shift demands your attention.
What Counts as Non-Financial Misconduct?
The FCA's definition is deliberately broad. Non-financial misconduct includes:
- Bullying and harassment
- Sexual misconduct
- Discrimination
- Violence or intimidation
- Dishonesty outside work (including criminal convictions)
- Serious breaches of an employer's internal policies on conduct
The key point: this isn't limited to behaviour in the office or during client meetings. Conduct at industry events, on social media, or even in your personal life can now fall within scope if it's serious enough to raise questions about your fitness and propriety.
Why This Matters for IFAs Specifically
Larger firms have HR departments, formal grievance procedures, and compliance teams dedicated to these issues. Most IFA practices don't. That's not a criticism—it's simply the reality of running a lean business.
But the FCA doesn't grade on a curve. The same standards apply whether you employ 500 people or five. And for smaller firms, the consequences of getting this wrong are proportionally more severe.
Consider a scenario: an adviser at your firm makes inappropriate comments to a colleague at a networking event. In the past, this might have been handled internally (or, frankly, swept under the carpet). Now, it potentially becomes a regulatory matter. The FCA expects you to investigate, document, and—where appropriate—report.
The Fitness and Propriety Connection
This isn't a new regulatory framework. The FCA is using its existing fitness and propriety rules more expansively. Under FIT 2.1, individuals must demonstrate honesty, integrity, and reputation. Non-financial misconduct directly challenges all three.
When you submit a Form A for a new approved person, or when existing approved persons are reviewed, the FCA can and will consider conduct that has nothing to do with financial advice. A conviction for assault, evidence of discriminatory behaviour, or a pattern of bullying could all result in someone being deemed unfit.
For principals and senior managers, there's an additional layer. Under the Senior Managers and Certification Regime, you're responsible for the conduct of those you supervise. If misconduct occurs and you failed to have reasonable systems in place to prevent or detect it, that's on you.
Practical Steps for Your Firm
1. Review your policies
Do you have a written policy on workplace conduct? Does it explicitly cover harassment, bullying, and discrimination? If your policy hasn't been updated since before 2020, it's almost certainly inadequate.
2. Document everything
If an incident occurs, your response needs to be recorded. What happened, when, who was involved, what action you took, and why. The FCA will want to see that you treated the matter seriously and followed a reasonable process.
3. Consider your reporting obligations
Under SUP 10C.14.18R, you must notify the FCA if you become aware of information that would be relevant to assessing someone's fitness and propriety. This includes serious misconduct. Failing to report can itself become a regulatory breach.
4. Training matters
Your team needs to understand what's expected of them—and what the consequences are. Annual compliance training should now include a module on conduct expectations, not just anti-money laundering and treating customers fairly.
5. Check your recruitment processes
When hiring, are you obtaining regulatory references that cover conduct issues? The FCA's template requires previous employers to disclose disciplinary action related to non-financial misconduct. Make sure you're actually reading these references carefully.
The Enforcement Reality
The FCA has been clear that it sees culture and conduct as foundational to consumer protection. Their logic: an adviser who bullies colleagues may also cut corners with clients. Someone who lies in their personal life may lie about product suitability.
You may disagree with this reasoning. But the FCA's position is now explicit, and enforcement will follow. The 41% figure cited in recent analysis suggests this isn't a marginal issue—it's becoming a significant portion of conduct cases.
For IFAs, the message is straightforward: your regulatory obligations now extend well beyond the advice you give and the products you recommend. How you and your team behave—in all professional contexts—is now firmly within the FCA's scope.
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