Kingsley Napley has welcomed the FCA's latest thoughts on culture and non-financial misconduct.

In a note on 24 October, Jill Lorimer, partner in the Financial Services Regulatory team at Kingsley Napley LLP, said: “The FCA has talked about the importance of non-financial misconduct (NFM) for several years now but is aware that education is a key part of its wider strategy to drive up standards.

"It views a firm’s culture as absolutely essential to encouraging the right behaviours and indeed helping to identify examples of counter-inclusive behaviour. It is also keen to challenge any remaining concerns that these are purely HR issues rather than issues going to the heart of a firm’s regulatory compliance.

"Today’s survey suggests a growing awareness of what non-financial misconduct is and that regulated firms are supporting and policing reports of NFM in various ways. The FCA will see this as progress on a macro level.

She further said: "However, in our experience firms are still working hard, and in some cases struggling, to get things right in what are often complex and nuanced situations. Firms must look both at fitness & propriety and conduct rules. There can be weighty consequences to getting it wrong. It is particularly challenging for smaller firms without significant in-house legal and compliance resource, or indeed a wealth of precedent in the form of previous examples to fall back on.

"Most firms understand by now that the FCA wants to drive change in the financial services sector by bringing behaviour such as bullying, harassment and discrimination into its regulatory net. However, they still need practical guidance on when to engage the regulator and how to navigate this new territory. They urgently need the publication of the FCA’s new rules in this area, which is expected any day now, so that they can review policies and procedures accordingly. Firms are crying out for more granular guidance and hope that the regulator will have taken this feedback on board during the consultation process.

"Nevertheless, today’s data provides an additional helpful source of information to inform firms as to the regulator’s expectations.”