City firms rush to prepare as FCA extends bullying and harassment crackdown
From next month, Britain's Financial Conduct Authority will widen its non-financial misconduct reporting rules to cover nearly 40,000 investment firms, brokers and insurers, prompting a rush to update policies and close ongoing investigations.
Some of the City of London's largest hedge funds, insurers and pension funds are hurrying to get ready for new rules that will stop firms from concealing bullying and harassment cases from regulators. Starting next month, the Financial Conduct Authority (FCA) will extend a crackdown that has so far focused on banks to a much wider set of investment firms and brokers.
What the rules require
Under the expanded regime, companies must report serious cases of non-financial misconduct to the FCA. They will also be required to disclose bad-behaviour reports — including racism, sexual harassment, violence and intimidation — to a manager's prospective future employer. The goal is to stop so-called "rolling bad apples," where problematic executives move between firms without ever facing consequences for their actions.
Jill Lorimer, a partner at law firm Kingsley Napley specialising in financial regulation, said firms are refreshing their policies, procedures and staff training ahead of the September deadline. She noted that companies currently handling internal misconduct allegations are trying to resolve them before the new regime takes effect, anticipating that the FCA will want to make an example of early cases to show it means business.
The rules will apply to any firm covered by the FCA's senior managers and certification regime, which holds top executives accountable for wrongdoing at their companies.
Background
The move comes despite pushback from some City firms and politicians who argue that excessive regulation is holding back investment and jobs in Britain's finance sector. However, a string of recent misconduct scandals has bolstered the case that cleaning up workplace culture could actually offer firms a competitive edge.
Among the cases cited is Lloyd's of London, which disclosed that its former chief executive John Neal had failed to declare a close relationship with a female colleague, and that whistleblower reports since 2023 had been mishandled. A court ruling upholding a ban on former Barclays boss Jes Staley over his misleading statements about his relationship with Jeffrey Epstein, along with an ongoing legal battle involving hedge fund manager Crispin Odey — who the FCA accuses of obstructing a harassment investigation — have further strengthened the regulator's resolve. An FCA spokesperson said unchecked bullying, harassment or violence raises broader questions about a firm's culture and damages confidence in financial services, though primary responsibility for tackling such behaviour rests with the firms themselves.
