By Vilde Witzøe, Senior Paralegal in the Workplace Bullying and Harassment Team at Bolt Burdon Kemp

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The saying, ‘a rolling stone gathers no moss’, vividly illustrates a concern that has been brewing in the financial sector over the past years.

Taking advantage of the less than comprehensive framework on non-financial misconduct, it appears that serial perpetrators have been rolling around from role to role, all while continuing to behave inappropriately and gathering no moss. 
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However, the Financial Conduct Authority’s (FCA) recent decision to extend its framework on non-financial misconduct, such as bullying, harassment and violence, to 37,000 regulated firms should hopefully mark a pivotal shift within the sector.

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These changes aim to prevent bad actors from simply moving from one financial institution to another, without facing any repercussions. From 1 September 2026, any “serious, substantiated cases of poor personal behaviour” must be formally reported to the regulator in the same way as financial misconduct, introducing a significantly heightened level of accountability for sector professionals. 

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From a legal perspective, the FCA has clarified their use of the term “serious”, implying that it will align closely with the provisions of the Equality Act 2010, which prohibits harassment and discrimination. As such, incidents of unwanted behaviour, which have the purpose or effect of violating an individual’s dignity, or create a hostile, degrading, humiliating or offensive environment, are likely to fall under the scope of the framework. 

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To facilitate the implementation of the extended rules, the FCA is drafting further guidance aimed at assisting firms in assessing the fitness and propriety of industry professionals, where incidents of non-financial misconduct have occurred. The guidance will seek to clarify what constitutes ‘non-financial misconduct’ in the sector, noting that, “previously, it was often unclear when these types of behaviours would amount to a conduct rules breach in a firm other than a bank”. The updated guidance currently remains open for consultation until 10 September 2025. 

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The FCA’s expansion and clarification of the framework will lead to an increased responsibility amongst the regulated firms to “take action and prevent harm”. As such, firms that are notorious for enabling volatile workplace cultures will face increased pressure to initiate meaningful change. Importantly, the FCA has urged firms to remain vigilant of lower-level misconduct, which may fall outside of the scope of the framework. The regulator has reiterated the importance of firms taking appropriate action against less serious incidents of bullying, which may point to a broader issue within their workplace culture. 

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It is essential for the regulated firms to ensure that their internal policies are robust enough to identify low-level misconduct, before these issues escalate into more serious breaches. In line with best practice, it is all about being proactive and mitigating risk - firms are encouraged to have in place clear, comprehensive zero-tolerance policies, accountable reporting mechanisms and transparent investigative procedures, with consistent disciplinary measures. 

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Having worked in a legal team that specialises in bullying and harassment claims, we often seen cases arise from pervasive, inappropriate behaviour at City firms. The extension of the FCA’s diversity and inclusion framework is to be applauded, as it aims to address the sector’s previously notorious failings. As per the Commons Treasury Select Committee’s 2024 report, ‘Sexism in the City’, “there has been a disappointing lack of progress on sexual harassment and bullying, including serious sexual misconduct. Far too little progress has been made and serious problems which should have been rooted out still persist.” 

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Unfortunately, serious instances of bullying and harassment can have a significant impact on victims, some of whom suffer career-ending psychological injuries. Firms that allow perpetrators of such conduct to advance their careers without facing consequences foster environments in which victims feel discouraged from speaking up. These “cultures of silence” constitute major barriers to stamping out inappropriate behaviour. However, it is important to recognise that the ramifications of widespread misconduct extend beyond the immediate psychological impact on victims; significant reputational and legal risks to the firm will also arise. 

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Ultimately, by establishing a clear and consistent framework for addressing inappropriate conduct, it is hoped that both firms and regulators can work together to combat toxic workplace cultures. Armed with regulatory safeguards, victims will be empowered to voice concerns in the workplace without fear of discrimination or retaliation. By taking proactive steps within the workplace, firms can safeguard employees from harm whilst simultaneously protecting their reputation, and reinforcing trust in the financial services sector.