FCA’s multi-firm review on non-financial misconduct at wholesale brokers

Introduction

The Financial Conduct Authority (FCA) recently held a webinar discussing its findings from a multi-firm review on non-financial misconduct (NFM) systems and controls across the wholesale broking sector. Within the webinar, the FCA set out what it perceived to be good practice at firms and what areas needed improvement that all firms should pay attention to. The FCA acknowledged the good work that firms had undertaken in designing their NFM frameworks, but the focus was now to ensure the frameworks are effective.

NFM is not a new area of focus for the FCA, but the regulatory spotlight has intensified considerably, not least with the NFM rules coming into force on 1 September 2026 and the FCA’s recent Final Notice against Crispin Odey. The webinar is the latest indication that the FCA expects firms to take this seriously and to satisfy themselves that their NFM frameworks are robust and meet its regulatory expectations.

Background

The webinar is based on a review carried out by the FCA on wholesale brokers to understand how they approach NFM in practice in relation to governance, speak-up arrangements, investigations and outcomes. 

The FCA selected wholesale brokers varying in size and business model and carried out:

1. Assessments of a sample of past NFM cases against the firm’s policies and procedures;
2. Assessments of existing reporting frameworks for raising concerns and managing them appropriately; and
3. Interviews with brokers and senior management responsible for NFM to test if the written frameworks work in practice.

The FCA noted there was clearly a considerable move away from the less desirable behaviours previously associated with trading floors to more inclusive and professional behaviours. And the FCA recognised this as progress, however, the challenge is ensuring effectiveness of the NFM frameworks. 

Key Findings

Policies and procedures

The review found that all firms had policies and procedures relevant to NFM, including whistleblowing, grievance, disciplinary and anti-harassment policies along with policies relating to employee performance and remuneration. However, some policies were recent and not properly embedded into practice. 

Areas of good practice were where firms had:

1. Detailed, step-by-step investigation processes with examples of reportable concerns.  
2. Safeguards in place to preserve independence of investigations where potential conflicts of interest could arise.
3. Processes in place to appoint alternative decision-makers or external counsel.
4. Strong arrangements which were demonstrated by clear governance showing how misconduct could affect performance-based remuneration outcomes. 

Where the FCA found firms could improve was in placing greater emphasis on preventing NFM and on ongoing assurance. For example, using clear management information (MI) to identify trends and patterns and to highlight problem areas that require attention. Although the FCA did stress that the MI should not compromise the need for confidentiality or data protection laws by naming or identifying the subject of an allegation in the MI. The FCA noted firms should also consider whether their controls can be strengthened through role-based training, proactive monitoring and ongoing testing of how the framework operates.

Reporting Channels

In relation to reporting, the review noted:

1. All firms had formal channels for reporting concerns, with whistleblowing arrangements and grievance procedures being the most common channels. Line managers were identified as a first point of contact for raising concerns.  
2. Firms with stronger arrangements had a clear distinction between whistleblowing and grievance routes, explaining how concerns raised through each route would be handled. There were also alternative escalation routes where the line manager was the subject of the concern.
3. Firms also found informal resolution of lower-level issues was effective. While this can be effective, the FCA encouraged that this should sit alongside formal thresholds for escalation, and firms should record rationale, actions and outcomes proportionately. There is also a need to clearly signpost to staff the option to raise concerns directly with the FCA whistleblowing function. 

Training

In relation to training, the FCA found that all firms provided mandatory training on NFM, the Senior Managers and Certification Regime and Speaking Up, which involved scenarios and role-relevant examples that helped staff recognise early indicators of NFM.

However, firms should consider whether line managers have the competence and capability to respond appropriately when concerns are being raised, and whether role-specific training is required. This is particularly important in light of the extension of the Conduct Rules (COCON) to NFM, which took effect on 1 September 2026 and covers both perpetrators and managers. A manager could therefore breach COCON by failing to take reasonable steps to prevent NFM, making manager culpability especially important where power imbalances may deter staff from speaking up.

The FCA also encouraged firms to look beyond completion rates when assessing training effectiveness. 

Speak-up culture

The FCA noted that all senior leaders acknowledged the benefits of a clear tone from the top that emphasises professionalism, respect and zero tolerance for misconduct. Stronger firms demonstrated:

1. Consistent engagement across all levels and locations through various practices including townhalls, employee surveys, operating an open-door policy and having regular discussions about culture and behaviour. This made speaking up part of a normal conversation.
2. Culture was considered as a business priority rather than a compliance requirement. The messages were supported by governance, clear accountability and independent challenge where this was proportionate.

With small firms, senior management were accessible, which meant employees had more access to the decision makers. 

An area of concern was where firms received a low number of grievances and whistleblower reports, and assumed these indicate a healthy culture. When this occurs, firms should closely review and assess employee survey results, exit interviews and feedback to determine whether the low number of grievances and whistleblower reports should be taken as a positive. 

It is also important that firms have in place credible escalation routes. Challenges around power imbalances persist where staff may be hesitant to raise concerns about senior managers who have more influence over career opportunities or are perceived as important to the business. The FCA would like firms to actively evidence that employees are comfortable to speak up.

Engagement with NFM allegations

In relation to NFM allegations, the FCA found that the stronger firms:

1. Carried out an initial fact-finding before formal investigation. The firms understood the nature of the allegations early, assessed the risks and preserved the evidence to determine whether formal investigation was necessary.
2. A joint HR and Compliance triage was effective where conflicts were managed and confidential information was kept secure. Firms with stronger frameworks had relevant safeguards in place to preserve independence. Those that were the subject of the allegations and those that may have an interest in the outcome of the investigations were separated, thereby reducing any perceived conflicts of interest and undue influence over the outcome.
3. For inappropriate conduct, proven misconduct should have meaningful consequences including making appropriate remuneration adjustments such as bonus deferral during investigations, the relevant fitness and propriety assessments, disciplinary action and regulatory references.

In terms of key areas for improvement, the FCA found that:

1. For informal concerns:
   1. The rationale for handling them informally and the actions taken should be documented. This is not only to ensure effective oversight, but also because if a manager resolves a concern informally without recording what was done and why, the firm may be unable to evidence that the manager took reasonable steps to prevent NFM under COCON.
   2. The person raising the informal concern should also be clear that a formal route remains available.
   3. Good record keeping of informal concerns also helps firms identify recurring inappropriate behaviour and patterns, allowing them to connect individual concerns with the wider MI discussed above.
2. Firms should also document how withdrawn complaints are assessed. Where complaints are withdrawn, firms need to consider why the complaint was withdrawn and consider whether this was due to retaliation, pressure or fatigue. A resignation should not result in closure of an investigation.

Closing Comments

While the broad market culture has taken a step in the right direction, visible leadership, manager capability and tone from the top remain critical as senior leaders demonstrate the type of conduct they will tolerate. Senior leaders are responsible for setting expectations within the team to influence behaviour change. Firms should be alive to power imbalances that persist, particularly where individuals complained about have an impact on career opportunities and are perceived as important for the business.

In light of the FCA’s findings, firms should review their current framework around NFM and focus on how effective it is in practice and whether any enhancements can be made.

Useful links:

• The FCA webinar on NFM at wholesale brokers – please see here.
• The review follows on from a survey the FCA conducted in 2024 on non-financial misconduct within the wholesale financial services sector, which found an increase in reported incidents in this sector, particularly for wholesale brokers. For our update on this previous survey, please see here.