Hike in conduct breach reports to FCA ahead of new rules rollout
There has been a substantial increase in reports of conduct breaches made to the financial watchdog, with the spotlight on City behaviour amid ongoing legal proceedings regarding the disgraced financier Crispin Odey.
The Financial Conduct Authority (FCA) received 10 per cent more complaints in 2024 compared to the previous year, according to the law firm Littler.
Littler found that misconduct reports were up to 4,224 from 3,843 in 2023.
Currently, breaches of the FCA’s “conduct rules” include failure to act with integrity, due skill, care and diligence, alongside shortcomings in customer treatment and cooperation with regulators.
But this definition is set to be expanded to include non-financial misconduct, with a much-trailed framework of guidance from the regulator – which will include a new “anti-harassment rule” – set to come into force in September.
Calls for a clearer definition of misconduct in financial workplaces have been brought into sharper focus by regulatory rulings against former Odey Asset Management boss Crispin Odey and former Barclays chief executive Jes Staley.
Odey is currently locked in a legal showdown with the FCA in a legal challenge to a £1.8m fine and ban from working in the financial services industry.
Meanwhile, in June last year Staley failed to overturn an FCA ban on holding senior leadership after he was found to have misled the regulator over the nature of his relationship with the pedophile financier Jeffrey Epstein.
Important clarification or ‘mission creep’?
Sophie Vanhegan, a partner at Littler, said that the data reflects: “With the increased focus on non-financial misconduct and broader workplace culture over the past few years, very few financial services firms are willing to take chances over allegations of misconduct by their staff.”
“They know that properly investigating allegations of misconduct, and where appropriate, timely reporting to the regulator, is key to maintaining a healthy workplace culture and supporting a strong relationship with the regulator.”
Vanhegan added: “The new guidance from the FCA provides welcome assistance for firms in distinguishing between matters that require regulatory escalation and those that may be more appropriately addressed solely through internal processes.”
But new rules seeking to regulate interpersonal conduct have attracted controversy, with shadow business secretary Andrew Griffith slamming the FCA’s efforts as a form of “mission creep” which distracts from the watchdog’s growth agenda.
The senior Tory described the proposals as a “perfect example of the unintended consequences of having too many well paid, deeply ‘woke’, public sector regulators making work for themselves”.