Non-financial misconduct: Will the FCA take a leaf out of the SRA's book?

Will the FCA's non-financial misconduct crackdown follow the SRA/legal sector model?

"With the increased scrutiny on non-financial misconduct of certified employees in the finance sector, the FCA is moving towards a regulatory model similar to the one that governs solicitors (SRA). This regime has seen solicitors sanctioned and/or struck off for a range of non-professional activities carried out in a social context, such as drink-driving offences. Certified finance employees may, in the future, find themselves subject to similar sanctions by the FCA.

"Whilst the intention is that the FCA will follow a similar path to the SRA, the outcome is reliant on how robust the FCA intends to be with taking enforcement action."

In practice, how might the FCA monitor conduct outside of the workplace, and what sort of conduct might it be cracking down on?

"The FCA will rely on regulated firms self-reporting non-financial misconduct of its staff. For example, if an individual is subjected to disciplinary action for non-financial misconduct at a work event (such as sexual harassment), the FCA will expect to be informed by the firm.

"Whistleblowing will be an important means by which the FCA becomes alerted to individuals or events involving non-financial misconduct. Employees are expected to raise formal concerns (also known as protected disclosures) to their employers and/or the FCA where they believe they are aware of a breach to a legal obligation or a criminal offence has been committed, is being committed or is likely to be committed.

"A more informal way by which the FCA can crack down on non-financial misconduct is by monitoring social media and particularly those platforms that are predicated on sharing social activity outside of the workplace. The vast majority of certified employees will likely have at least one of Instagram or Facebook. Photos and videos that are uploaded to social media platforms may become evidence which the FCA later relies on to prove the likelihood of non-financial misconduct taking place."

Andrew's comments were published in City A.M., 3 May 2024.