FCA Expands Scrutiny of Non-Financial Misconduct Under SMCR
Published on 08/04/2026 at 16:28 | Redaktion boerse-global.de
The Financial Conduct Authority (FCA) is pressing ahead with plans to bring non-financial misconduct under formal regulatory scrutiny for all firms covered by the Senior Managers and Certification Regime (SMCR). From September 1, 2026, the new rules will require firms—including non-banking entities—to put robust measures in place to prevent bullying, harassment, and work-related violence. For UK employers, the shift signals that conduct once viewed as an internal HR matter now carries direct regulatory weight.
The regulator's finalized guidance, published in PS25/23, confirms that non-financial misconduct is now a central component of fitness and propriety assessments. That means HR teams face a fresh challenge: determining when an employee's private conduct intersects with their professional regulatory standing.
Conflict Resolution Becomes a Statutory Expectation
The regulatory landscape is tightening further with revisions to the Acas Code of Practice, which now establishes informal resolution as a statutory expectation. The change responds to the significant economic toll of workplace conflict, estimated to cost the UK £28.5 billion annually—with disciplinary procedures alone accounting for £2.36 billion.
Under the revised code, tribunals may apply a 25% compensation uplift if an organisation unreasonably fails to engage in resolution efforts. Mediation boasts a success rate of 70% to 80%, yet data suggests roughly one-third of organisations currently lack the internal mediation skills needed to meet the new standard.
Tougher Sexual Harassment Duties From October 2026
From October 1, 2026, UK employers will face a higher legal bar on sexual harassment. The law will require firms to take all reasonable steps to prevent such conduct, with liability extending to third-party harassment across all protected characteristics. A recent survey found that 74% of employers believe they are compliant—but fewer than 25% currently monitor the effectiveness of their prevention measures.
Tribunals Rule Against Improper Misconduct Dismissals
Recent employment tribunal rulings highlight the financial and legal risks of mishandling misconduct investigations, particularly where disability is involved. On August 4, 2026, a Cambridge tribunal awarded Samantha Dallimore nearly £50,000 following her dismissal from AT Transport Solutions. The company cited gross misconduct, alleging she was under the influence at work, but the tribunal determined she had actually experienced a bipolar episode. The award included over £20,000 for injury to feelings.
In a separate case, Avon and Somerset Police was ordered to pay approximately £19,000 to staff member Donna Vale. The tribunal found the constabulary committed disability harassment by questioning her ADHD diagnosis and failing to provide noise-cancelling headphones as a reasonable adjustment. The presiding judge emphasised that the legal duty to provide adjustments rests solely with the employer.
Financial Reporting and Administrative Changes
Beyond conduct regulation, the FCA finalized rules on August 3, 2026, aimed at streamlining transaction reporting. The changes are expected to cut industry reporting costs by £108 million per year starting April 3, 2028. The regulator will remove FX derivatives and approximately seven million EU-only instruments from the reporting scope, while reducing the number of required reporting fields from 65 to 52.
In the legal sphere, nursing professional Sandie Peggie was granted a full appeal on July 30, 2026, regarding a tribunal ruling involving a dispute over changing room access. The Employment Appeal Tribunal allowed the case to proceed on all 13 grounds, with a full hearing anticipated in early 2027.
Meanwhile, the FCA's Upper Tribunal has upheld bans against two advisers for dishonesty related to £126 million in pension transfers. Though the bans remained, the tribunal reduced the associated fines for the individuals involved to approximately £41,000 and £16,000, respectively.
