UK financial watchdog expands bullying rules to 37,000 City firms

TruthLens AI Suggested Headline:

"FCA Expands Bullying and Harassment Regulations to Over 37,000 Financial Firms"

UK financial watchdog expands bullying rules to 37,000 City firms analysis cover image The Guardian 8.7
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Original Article Source: https://www.theguardian.com/business/2025/jul/02/fca-watchdog-bullying-rules-city-expansion
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TruthLens AI Summary

The UK's financial watchdog, the Financial Conduct Authority (FCA), is taking significant steps to enhance accountability among financial firms by expanding its bullying and harassment rules to encompass over 37,000 City firms. This initiative aims to address the issue of 'rolling bad apples'—individuals who evade consequences for misconduct by shifting from one firm to another without facing appropriate action. Under the new regulations, serious and substantiated cases of poor personal behavior, particularly among senior managers in sectors such as hedge funds, insurers, and pension firms, must be reported not only to the FCA but also to future employers. This move marks a notable shift, as previously only banks were mandated to report such behavior. The FCA's decision reflects a broader commitment to enforce accountability and transparency in the financial sector, particularly under the senior managers and certification regime (SM&CR), which is designed to hold senior executives responsible for their actions and those of their firms.

The new rules, which will take effect on September 1, 2026, also extend to various forms of non-financial misconduct, including racism, sexual harassment, and violence. Sarah Pritchard, the FCA's deputy chief executive, emphasized that unchecked bullying and harassment within firms signal deeper cultural issues that can jeopardize decision-making and risk management. By implementing these regulations, the FCA aims to foster a more consistent and trustworthy environment across the industry, supporting the majority of firms that prioritize ethical conduct. Notably, however, these rules will not apply to certain entities, such as payments and e-money firms or regulated investment exchanges, which are not subject to SM&CR regulations. This initiative comes at a time when the FCA is facing pressure from the government to reduce regulatory burdens, highlighting the delicate balance between promoting accountability and easing operational constraints for financial businesses.

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Source URL: https://www.theguardian.com/business/2025/jul/02/fca-watchdog-bullying-rules-city-expansion

The UK’s financial watchdog is expanding bullying and harassment rules to more than 37,000 City firms, in an effort to crack down on “rolling bad apples” who avoid consequences by hopping from firm to firm.

It means that “serious, substantiated cases of poor personal behaviour” by senior managers at a range of firms including hedge funds, insurers and pension firms will have to be reported to theFinancial Conduct Authority(FCA), as well as future employers who are assessing whether new hires are fit and proper for the job.

Previously, only banks were required to report bad behaviour to the watchdog. The rules will now apply to tens of thousands of other firms across the City that are bound by the so-called senior managers and certification regime (SM&CR) that is meant to hold senior bosses accountable for wrongdoing at their firms.

The regulator said the expanded rules would help “prevent ‘rolling bad apples’ – people moving from firm to firm without appropriate action being taken or without past serious non-financial misconduct being disclosed”.

Sarah Pritchard, the FCA’s deputy chief executive, said: “Too often when we see problems in the market, there are cultural failings in firms. Behaviour like bullying or harassment going unchallenged is one of the reddest flags – a culture where this occurs can raise questions about a firm’s decision-making and risk management.

“Our new rules will help drive consistency across industry and support the vast majority of firms that want to do the right thing to deepen trust in financial services.”

The expanded rules on non-financial misconduct, which also cover racism, sexual harassment and violence and intimidation,will come into force on 1 September 2026. However, they will not apply to payments and e-money firms, regulated investment exchanges or credit ratings agencies, none of which are subject to SM&CR rules.

TheFCA recently won a tribunal challenge brought by the former Barclays boss Jes Staley, with judges upholding a lifetime ban against the former chief executive for misleading the regulator over the nature of his relationship with the convicted child sexual abuse offender Jeffrey Epstein and their last point of contact.

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The new rules come despite the FCA and fellow regulators facing mounting pressure from the government to slash red tape for businesses.

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Source: The Guardian