Reform in respect of personal accountability establishes 2026 as a year of transition and heightened exposure for financial firms, as personal conduct and organizational culture converge.
The addition of non-financial conduct rules will see leadership behavior used as a proxy for good governance and consumer outcomes. Beyond the traditional purview of HR, bullying and harassment represent regulatory risk, as the FCA prepares to scrutinize personal conduct that belies poor organizational integrity, judgment or culture.
This pushes financial firms to the edge of their control, and raises a number of practical challenges for how to manage unpredictable and highly sensitive cases.
Building a supportive governance culture will also be tied more closely to personal accountability. Senior managers are liable for behavior they permit or fail to address. Licensed leaders must take “reasonable steps” to ensure their function is compliant or face individual enforcement action.
These sit alongside changes designed to streamline governance structures, approvals and Statement of Responsibility requirements — creating the clarity required to enforce personal accountability.
Be clear in response
“It matters how leaders respond to poor conduct. Under the new non-financial misconduct guidance under the SMCR Conduct Rules, financial institutions must treat escalation as a core control. Clear timelines, disciplined record-keeping and well-judged intervention will allow you to demonstrate effective processes and oversight to the regulator.”
Polly James, Partner and Global Practice Co-Leader - Financial Services Disputes and Investigations
Strengthen culture and conduct frameworks now
Prepare for the FCA’s new non-financial misconduct rules taking effect on 1 September 2026. Firms should update policies, training, and reporting systems to ensure they are ready for expanded Conduct Rule coverage across the SM&CR population.
Non-financial misconduct regulation – regulatory overreach, or progressive risk management strategy?
The new guidance, which amends the COCON and FIT sourcebooks in the FCA Handbook, will take effect on 1 September 2026. Firms now have less than nine months to prepare for one of the most significant shifts in conduct regulation since the introduction of the Senior Managers and Certification Regime (SMCR).
2026 guide to Non-Financial Misconduct Compliance
With the FCA’s new non-financial misconduct rules taking effect in less than nine months, firms should begin planning now. Here are some key areas to consider as part of your preparation.
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