Key Insights from Following the Rules

The regulatory landscape is shifting, and financial services firms need to be ready. With the FCA's recent expansion of Non-Financial Misconduct (NFM) rules set to take effect in 2026, organisations across the industry are grappling with how to effectively address toxic workplace behaviours and cultural failings.

I was delighted to join Lucy McNulty on her podcast "Following the Rules" alongside Shaun Hurst from Smarsh to explore these critical changes and share practical guidance for firms navigating this evolving regulatory environment.

What We Covered

The discussion delved into the real-world implications of the FCA's updated approach, which now treats bullying, harassment, and discrimination as conduct that could impact a person's fitness for regulated roles. Key topics included:

Practical Implementation Strategies

• How firms of all sizes can effectively detect, respond to, and minimise non-financial misconduct

• Defining what constitutes "serious" misconduct under the new regulatory framework

• Moving beyond compliance box-ticking to drive meaningful cultural change

Regulatory Reality From 2026, the FCA will supervise serious NFM cases more closely, making it essential for firms to have robust systems and processes in place. We explored what this means for different types of organisations and how they can prepare effectively.

Cultural Transformation Perhaps most importantly, we discussed how organisations can ensure that their response to these regulatory changes creates lasting, positive cultural impact rather than simply meeting minimum compliance requirements.

Why This Matters Now

The expanded NFM rules represent a significant shift in regulatory thinking—one that recognises the connection between workplace culture and broader organisational integrity. For financial services firms, getting ahead of these changes isn't just about compliance; it's about building stronger, more resilient organisations.

Whether you're looking to understand the regulatory requirements, implement effective detection systems, or drive meaningful cultural change, this discussion provides actionable insights to help guide your approach.

Listen to the full discussion here

Bridging the Misconduct Management Gap

One of the key themes that emerged from our podcast discussion was the challenge many firms face in addressing what I call "threshold misconduct", behaviours that fall between informal coaching and formal disciplinary action. This gap in traditional misconduct management approaches was a recurring theme throughout our conversation.

During the podcast, we explored how firms often find themselves trapped between two inadequate options; either proceeding with formal disciplinary procedures that can damage morale and increase attrition, or relying on informal conversations that lack the rigour, consistency, and documentation needed for regulatory scrutiny. In some cases, these crucial conversations simply don't happen at all.

An Innovative Response

Built on some of the insights shared in the podcast about the need for structured, middle-ground solutions, I've been developing an innovative intervention program. This research-backed approach addresses exactly the type of conduct challenges we discussed, providing a practical framework for managing non-financial misconduct before it escalates.

The programme comprises five key results-coaching components that work together to create behaviour change and so remedy, rather than punish, misconduct.

From Podcast Insights to Practical Solutions

What makes this approach particularly relevant to our podcast discussion is how it addresses the regulatory reality we explored. As we discussed, the FCA expects firms to tackle behavioural issues proactively, before they escalate into more serious misconduct. This program, The Conduct Compass provides exactly the kind of documented, consistent approach that demonstrates proactive conduct management while creating meaningful behavioural change.

The programme's foundation in behavioural science research from leading universities aligns with the evidence-based approaches we advocated for in our conversation. Rather than simply tick-box compliance, it focuses on sustainable behaviour change and cultural transformation, the deeper work that regulators increasingly expect to see.

Have questions about implementing NFM strategies in your organisation, or want to explore innovative approaches like The Conduct Compass? I'd be happy to discuss how these regulatory changes might impact your firm and explore tailored solutions for compliance and cultural transformation.