Financial services employers can find themselves facing difficult decisions when it comes to acting on employee misconduct due to the complex interaction between employment law and PRA/FCA regulatory obligations. That is particularly the case when it comes to non-financial misconduct which has been a particular focus for the FCA in recent years.
What is non-financial misconduct?
There is no legal or formal definition of non-financial misconduct and no specific examples contained in the FCA Handbook.
This means that in practice, such misconduct could encapsulate a wide range of employee behaviour or actions. It could include for example, discrimination, bullying, sexual harassment, or criminal behaviour.
Non-financial misconduct can also include acts that do not occur in the workplace but are still capable of affecting the individual’s ability to perform their regulated role.
Ultimately, such misconduct may potentially breach the FCA Conduct Rules and/or lead to a finding by the employer that the individual is not fit and proper for the purposes of the FIT test required by the FCA Handbook. It may also result in an adverse finding by the FCA as to the individual’s and/or the firm’s fitness and propriety.
When is the FCA regulatory regime engaged?
The main purpose of the FCA’s Conduct Rules is to set a standard of behaviour that is expected of almost all employees (excluding ancillary staff) at regulated firms, with a view to reinforcing the importance of a positive working...
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