The New FCA Non-Financial Misconduct Rules: What Mortgage Broker Firms Need to Do:
The FCA’s new rules on non-financial misconduct came into force on 1 September 2026. The changes are relevant to mortgage brokers and other regulated financial services firms, with a focus on tackling workplace bullying, harassment and violence.
While mortgage firms are already expected to maintain appropriate standards of conduct, the changes clarify how certain behaviour can amount to a regulatory conduct breach and how misconduct may affect an individual’s fitness and propriety.
So, what do mortgage broker firms need to know, and what action should they be taking?
What Is Non-Financial Misconduct?
Non-financial misconduct refers to inappropriate behaviour that is not directly financial in nature.
Examples may include:
- Workplace bullying or intimidation.
- Harassment of colleagues.
- Violence or threats of violence.
- Other inappropriate behaviour that may be relevant to an individual’s fitness and propriety.
The FCA’s new rules specifically extend the Conduct Rules in non-banking firms to cover certain work-related bullying, harassment and violence against colleagues, where there is a sufficient connection to an individual’s work.
The rules are not intended to bring every aspect of an employee’s private life within the FCA’s conduct requirements. However, conduct outside work may still be relevant when assessing an individual’s fitness and propriety.
You can read the FCA’s guidance here: Non-financial misconduct in financial services.
Why Does This Matter to Mortgage Brokers?
Non-financial misconduct is not limited to large financial institutions. The FCA’s changes extend relevant requirements to non-banking regulated firms, including firms operating in the mortgage sector.
For smaller brokerages, inappropriate behaviour may be harder to identify or address where there is no dedicated HR department or formal management structure.
However, firms should not assume that having only a small number of employees means these issues can be overlooked.
A workplace culture that tolerates bullying or harassment can affect staff wellbeing, damage the firm’s reputation and create wider conduct and governance risks.
Mortgage firms should therefore consider whether their existing policies and procedures adequately address non-financial misconduct.
What Should Mortgage Broker Firms Do?
The FCA expects affected firms to consider whether changes are needed to their existing arrangements.
1. Review Your Staff Policies
Check whether your staff handbook, disciplinary procedures and workplace conduct policies clearly explain the standards expected of employees and managers. Policies should explain how concerns can be raised, how allegations will be handled and what action may follow where misconduct is established.
2. Make Sure Staff Know What Is Expected
Staff and managers should understand what constitutes unacceptable behaviour and how concerns should be reported. This is particularly important in smaller firms, where informal working relationships can sometimes make employees reluctant to raise concerns.
3. Review Your Fitness and Propriety Assessments
The FCA has clarified how non-financial misconduct may be relevant when assessing whether an individual remains fit and proper. Firms should consider whether their existing assessment processes adequately take relevant conduct into account, including when reviewing staff suitability and making employment decisions. Any assessment should be fair, evidence-based and proportionate to the circumstances.
4. Check Your Reporting and Record-Keeping Procedures
Firms should review how potential conduct breaches are documented, investigated and escalated. Where misconduct is established, appropriate records should explain the concern, the steps taken, the outcome and any action required. Firms should also consider whether regulatory notification or regulatory-reference obligations apply in the circumstances.
5. Review Regulatory References
The FCA’s guidance clarifies the relevance of non-financial misconduct to regulatory references. Firms should ensure their reference procedures reflect applicable requirements and that information is handled accurately and fairly.
Does the FCA Expect Firms to Monitor Employees’ Private Lives?
No. The changes do not require firms to routinely monitor employees’ private lives or social media accounts. However, relevant conduct outside work may be considered as part of a fitness and propriety assessment where appropriate. Firms should avoid investigating trivial, implausible or irrelevant allegations and must respect applicable privacy, employment and data protection requirements.
The aim is to ensure that relevant misconduct is addressed fairly, not to create unnecessary monitoring or intrusive investigations.
A Practical Compliance Checklist
Mortgage broker firms should consider the following actions:
- Review staff conduct, disciplinary and workplace policies.
- Ensure staff and managers understand the expected standards of behaviour.
- Check how allegations and potential conduct breaches are recorded and investigated.
- Review fitness and propriety assessment procedures.
- Check regulatory-reference and notification processes.
- Confirm whether any additional guidance or action is required by your principal firm or network.
- Record any changes made and communicate them to relevant staff.
Not every firm will need to introduce entirely new policies. In many cases, the priority will be to review existing arrangements and make any necessary updates.
Final Thoughts
The FCA’s new non-financial misconduct rules reinforce the importance of appropriate workplace behaviour and effective governance across regulated financial services.
For mortgage brokers, the key is to understand how the changes apply to the firm, ensure staff know what is expected of them and have appropriate procedures in place to address concerns. A clear policy is a useful starting point, but firms must also consider how those procedures operate in practice.
Taking time to review your current arrangements can help identify gaps, support a positive workplace culture and demonstrate that conduct concerns are taken seriously.