FCA’s new harassment and bullying rule expands possibility for individual bans

The UK Financial Conduct Authority’s (FCA) new harassment and bullying rules introduce the possibility of the regulator banning more individuals directly. The length of time it takes for harassment and bullying cases to play out, however, means it could be years before the regulator takes meaningful action, despite the new approach, lawyers said. 

While the FCA has always been able to sanction individuals for code of conduct (COCON) violations, the additional non-financial misconduct (NFM) guidance now explicitly tackles harassment and bullying. The new approach set out last week would give the FCA the power to act on the outcome of firms’ internal disciplinary panels without having to rely on a court or tribunal judgment. 

Sam Clyndes, a barrister and director in Fieldfisher’s financial regulation team in London, said that, in a “paradigmatic example” of someone to whom the senior manager rules apply and whose behaviour has been sufficiently serious as to establish a breach of the code of conduct, the FCA would have the “teeth” to act.

The FCA had the option to “potentially take forward the breach of the code of conduct on a disciplinary basis, which means seeking a public censure or a financial penalty”, as well as being able to “impose a ban on holding a senior management position or even from working in the regulated sector in any capacity”, added Clyndes, who spent eight years in the FCA’s enforcement team.

Additionally, he said, he didnʼt think it was “necessarily the case that a firm’s process must have concluded” before the FCA acted.

An FCA survey published in November 2024 revealed that until now, action by firms “rarely resulted in remuneration adjustment”.

Could act alone  

According to the FCA’s Non-Financial Misconduct consultation (CP 25/18), firms should notify it when a disciplinary action outcome makes a finding of serious misconduct. However, most regulated firms are small and might not have sufficiently developed human resources and disciplinary policies or procedures to address NFM breaches. In that case, the FCA could act on whistleblowing or staff reports if there were questions about who controls the firm or a lack of internal disciplinary policy, Clyndes said.  

“A lot of FCA disciplinary cases and prohibition cases are in relation to conduct by individuals at firms which is equivalent to a criminal offense or some form of civil wrong. There’s lots of [enforcement] action in relation to dishonesty and a lack of integrity, which requires the case to be heard before the [Regulatory Decisions Committee]. The FCA has proved itself capable of handling that, and so I think it would prove itself capable of handling this as well,” he added.

Employment tribunal outcomes  

The initiation of employment tribunal proceedings or outcomes may be reportable to the FCA as part of Principle 11 obligations, which are discussed in SUP 15.3. However, tribunals’ findings against regulated individuals for bullying and harassment generally have not translated into FCA actions.

As Arpita Dutt, an independent workplace investigator and mediator at Arpita Dutt Consulting in London, said: “There are findings made in the employment tribunal against regulated individuals for bullying and harassment in financial services firms, and you donʼt really see anything happening as a result of those. The employment tribunal awards the remedy, and the [complainant] goes away and receives the compensation. But there isn’ʼt anything that happens to the individuals [perpetrators] — or at least we never know.”

However, “now there is the prospect” for further action to be taken, she said.

Fit & Proper

In addition, the FCA could now include considerations from employment tribunal outcomes related to bullying and harassment in its assessments of individuals under the Fit and Proper Test for Employees and Senior Personnel (FIT).  

Employment tribunal decisions matter when it comes to assessing a person’s integrity. While the conduct itself is important, integrity goes beyond just the actions — and the FCA should look at it that way, said Dutt.

“Even if the tribunal doesn’t make a formal finding of sexual harassment, there might still be concerns raised in the judgment about how the individual behaved or gave evidence, which could reflect poorly on their integrity. Since it’s a public legal ruling, it should definitely be considered,” said Dutt.