Non-Financial Misconduct: 3 things your firm should be doing now
When released, the FCA’s Policy Statement on Non-Financial Misconduct (NFM) will be a significant regulatory initiative.
In anticipation of the Policy Statement, Peter Haines, Director of GRC Training, recommends firms do the following to ensure they are prepared:
Review your firm’s culture and values, policies and procedures
Ensure that zero tolerance for NFM is enshrined in your culture and values. This extends to your policies and procedures, especially as the law designed to prevent sexual harassment (the Worker Protection (Amendment of Equality Act 2010) Act 2023) took effect in October 2024, and having an effective anti-harassment policy is one of the firm’s required proactive measures under that legislation.
Review your firm’s governance over fitness and propriety for SMFs and certified staff
This applies particularly to Senior Management Functions (SMFs), as the final approval rests with the regulator(s). Your firm’s governing body should be very involved in assessing the due diligence conducted in respect of any new SMFs and any current or past NFM should be considered in such due diligence.
Ensure that there is appropriate governance over conduct rule breaches
Conduct rule breaches are normally escalated to Compliance, HR or to both. It is crucially important that both functions are involved, especially where the breach might need to be reported to the regulator.
We hear anecdotally that firms might be taking too light an approach to disciplining conduct rule breaches in order to avoid reporting them to the FCA. Whilst conduct rule breaches can be difficult to assess, it is crucial for firms to reach a reasonable conclusion as to the seriousness of any breach and its associated disciplinary sanction.
The SMF with the prescribed responsibility for training and reporting on the conduct rules should be very sure that the right decisions are being reached.
Whilst there is a delay in the release of the Policy Statement, it is important to note that NFM is not low on the regulatory agenda for the FCA. Firms must not take a relaxed view of it simply because of the delay in confirming the rules and guidance and should act now.
Our Non-Financial Misconduct Training Package consists of a range of training, including tailored eLearning, regular live briefings, public courses and more for Senior Management, Compliance Teams and front and back-office staff, giving you a whole business approach to NFM training. Get in touch or click here to find out more.
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About the Author
Peter has over 35 years’ experience in the field of regulation and compliance. A chartered accountant, Peter spent 6 years working with the UK’s SFA (now the FCA) and has headed up regional and global compliance functions at Paribas, UBS Investment Bank and Bank of America.
Since 2006, Peter has specialised in training, focusing on boards, senior management and assisting the next generation of compliance officers. His coverage includes most areas of compliance and financial crime, corporate governance and risk management. His style is inclusive, interactive and based on practicalities, not just rules.
As Director of GRC Training, he works closely with our clients to ensure that our programmes are tailored to their exact needs and meet, or surpass, their expectations.
