The FCA is set to expand its definition of misconduct to include non-financial misconduct, with a new anti-harassment rule coming into force in September, according to multiple reports. Shadow business secretary Andrew Griffith criticized the new rules as 'mission creep' that distracts from the watchdog's growth agenda, major media reported. Littler reported that the FCA received 10% more complaints in 2024 compared to the previous year.
This rise in complaints and misconduct reports reflects a broader trend of increased regulatory scrutiny and reporting, with firms becoming more proactive in flagging issues to the regulator. The expansion of misconduct rules to cover non-financial behavior marks a significant shift in the regulatory landscape, aiming to address workplace culture and harassment more directly. However, critics argue that this could overburden the FCA and divert resources from its core financial oversight functions.
The new anti-harassment rule, effective September, will require firms to report incidents of non-financial misconduct, potentially leading to a further increase in reported cases. This regulatory change comes amid a backdrop of high-profile scandals that have heightened public and political pressure on the financial services industry to improve conduct standards. The FCA's approach is part of a wider effort to foster healthier workplace cultures, but it also raises questions about the balance between regulation and business growth.
Andrew Griffith's criticism underscores a political divide over the FCA's priorities, with some viewing the expanded remit as essential for accountability and others seeing it as regulatory overreach. The increase in complaints and misconduct reports may also reflect greater awareness and willingness among employees to report issues, as well as firms' efforts to comply with evolving expectations. 9% rise in complaints in the second half of 2025 was driven by increases in banking and credit-related grievances, though the regulator did not specify the exact causes.
This trend suggests that consumer dissatisfaction remains a persistent challenge for the industry, even as firms grapple with internal conduct issues. The combination of rising complaints and misconduct reports paints a picture of an industry under significant pressure to reform its practices and rebuild trust. The FCA's expanded definition of misconduct is likely to face legal challenges, as firms and individuals test the boundaries of the new rules.
8 million and a ban, exemplifies the potential for pushback against regulatory actions. Odey's challenge could set a precedent for how the FCA's enforcement powers are applied in non-financial misconduct cases. The outcome of his appeal may influence the regulator's approach to future investigations and penalties.
Meanwhile, the high-profile nature of such cases has accelerated reporting, as firms seek to avoid reputational damage and demonstrate compliance. Littler noted that companies are now more inclined to report misconduct quickly to stay ahead of regulatory scrutiny. Some of the 4,224 misconduct cases logged in 2025 involved sexual harassment, highlighting the prevalence of serious workplace issues.
The FCA's focus on non-financial misconduct aims to address these problems, but the effectiveness of the new rules will depend on consistent enforcement and clear guidance. The regulator has provided new guidance to help firms distinguish between matters requiring regulatory escalation and those that can be handled internally, according to Littler. This guidance is intended to streamline reporting and reduce unnecessary burdens on firms, while ensuring that serious misconduct is properly addressed.
The increase in misconduct reports may also be attributed to the FCA's more proactive stance and the introduction of new reporting requirements. As the regulatory landscape evolves, firms are investing in compliance and training to mitigate risks and foster ethical cultures. The financial services industry is at a crossroads, balancing the need for robust oversight with the imperative to support innovation and growth.
The FCA's expanded remit and the resulting rise in reports reflect a broader societal shift towards greater accountability and transparency in the workplace. However, the long-term impact of these changes on the industry's competitiveness and culture remains to be seen. The case of Jes Staley, who failed to overturn an FCA ban on holding senior leadership after being found to have misled the regulator over his relationship with Jeffrey Epstein, underscores the serious consequences of misconduct at the highest levels.
Staley's failed appeal reinforces the FCA's authority to impose strict penalties on senior executives for integrity breaches. This case, along with others, has likely contributed to the increased reporting of misconduct, as firms and individuals recognize the heightened risks of non-compliance. The FCA's actions in high-profile cases send a clear message that misconduct will not be tolerated, regardless of an individual's position.
As the regulator continues to expand its focus, the financial services industry must adapt to a new era of accountability, where both financial and non-financial conduct are under intense scrutiny. The rise in complaints and misconduct reports is a symptom of this transformation, reflecting both the challenges and the progress in creating a more ethical and transparent financial sector.