knowledge 24 July 2025 |

Non-financial misconduct – the next frontier?

The UK Financial Conduct Authority’s (“FCA”) increasing focus on non-financial misconduct (“NFM”), including the release of its policy statement and launch of its consultation on NFM guidance on 2 July 2025, has garnered wide-spread attention across the financial services industry, including in Ireland. This issue relates to what impact NFM can have on the ability of the person to hold certain positions in regulated financial services firms. As a result, it calls into question whether we are likely to see the topic of NFM becoming a focal point of the Central Bank of Ireland (the “CBI”) too. While, to date, there has not been explicit guidance from the CBI on this topic, firms should ensure they: have a culture which does not support NFM; carry out detailed checks on those proposed to hold or currently holding controlled function (“CF”) or pre-approval controlled function (“PCF”) roles in the firm; and have sufficient processes in place to deal with instances of NFM.    

NFM is generally understood to refer to bullying, harassment and discrimination, although it may also extend to misconduct in private life, conduct online, or conduct which otherwise is sufficiently serious, or morally reprehensible¹. These may be relevant to an individual’s fitness and probity (“F&P”). Increasingly, such matters are considered not merely to be personnel issues but issues which go to an individual’s ability to carry out good governance and what is expected of them.

The UK position

In the UK, the FCA has been explicit in framing NFM as relevant to its conduct rules and fitness standards, including the requirement to act with integrity. It has made clear that the litmus test is not one of moral judgment about an individual’s conduct but that there must be a link between an individual’s NFM and their fitness and propriety to perform their role in a regulated financial service provider.

One of the most publicised decisions from the UK is that of the English Upper Tribunal (the “Tribunal”) in FCA v Frensham [2021] UKUT 0222. Frensham was convicted of attempting to meet a child following sexual grooming. Although Frensham did not commit the offence at or through his work and it did not involve dishonesty, the FCA sought to prohibit him on the basis that he was no longer a ‘fit and proper’ person.

The Tribunal held that Frensham’s criminal conviction alone would not have been sufficient to warrant a finding that he was not fit and proper. It criticised the FCA for having failed to “forge the necessary link” between his criminal offence and his professional work. The Tribunal dismissed as “speculative and unconvincing” the FCA’s attempt to rely on the fact that Frensham’s offence involved an abuse of trust and the position of trust he held as a financial adviser. Insofar as the FCA argued that Frensham’s “willingness to disregard ethical and legal standards” posed an unacceptable risk to customers and the integrity of the financial services industry, the Tribunal said this was a bare assertion and lacked any supporting evidence.

Frensham was however confirmed not to be fit and proper due to his conduct after he was criminally charged, including his failure to notify the FCA of his arrest and remand; his failure to notify the FCA that a professional body had declined to renew his statement of professional standing; and his lack of remorse for his actions. As the Tribunal observed in relation to Frensham, “it is not the fact that a criminal offence has been committed that is fatal to [his] case, but the manner in which [he dealt] with the consequences”.

In that case the Tribunal commented that “a distinction is to be drawn between personal integrity and professional integrity. That does not mean that the two concepts must be treated as being entirely separate. The regulator concerned will have to consider whether in all the circumstances the failings of personal integrity also amount to failings of professional integrity… Provisions requiring professional persons to act with integrity or to be of sufficient repute may reach into private life only when conduct that is part of a person’s private life realistically touches on their practice of the profession concerned. The conduct must be qualitatively relevant because it engages the standard of behaviour set out in the regulatory code concerned.”

More recent cases in the UK have repeated that the manner in which an individual deals with the consequences of NFM is critical, including any evidence that there has been a lack of integrity in dealing with an internal disciplinary process related to the NFM (as opposed to the underlying NFM allegations). In a high-profile recent case, the FCA imposed a £1.8 million fine, and a permanent industry ban on Crispin Odey, in circumstances where he was found to have interfered with his firm’s internal disciplinary process into longstanding sexual harassment allegations. This demonstrates the teeth of the UK regime in upholding standards of personal conduct for those holding regulated roles, even in the absence of a criminal conviction.

The FCA is also taking steps to expand the remit of the UK’s Code of Conduct (“COCON”) to capture serious NFM such as bullying, harassment or violence. As mentioned above, on 2 July 2025 the FCA announced, through a policy statement and consultation paper, that the new COCON rule will apply to approximately 37,000 other financial service providers from 1 September 2026. In addition to the above, the new rule states that serious NFM against colleagues will be a regulatory concern. This will have an effect on how an individual’s fitness and propriety is assessed in the UK. To address this, the FCA is conducting a consultation on proposed guidance for firms in light of the changes. The consultation is open until 10 September 2025, after which the FCA intends to release a final guidance document by the end of 2025.

The Irish position

While the FCA has shown increased focus on NFM both inside and outside of the workplace, in Ireland, CBI guidance remains focused on promoting an environment of good governance and financial responsibility. However, conduct and culture are increasing priorities for the CBI too. Although the topic of NFM has not been something that the CBI has explicitly called out to date, it may consider NFM in relation to a person’s individual accountability and/or F&P when a person is proposed for, or is carrying out, a PCF role in a regulated financial service provider.

The Individual Accountability Framework

The Central Bank (Individual Accountability Framework) Act 2023 (the “IAF Act”) is, by now, an established feature of the financial services regulatory landscape. Included within the IAF Act are individual conduct standards which apply since 31 December 2023 (the “Conduct Standards”). The Conduct Standards set out standards of behaviour which the CBI will require of relevant individuals in all regulated financial services firms, irrespective of sector, and are split between common conduct standards that apply to any person carrying out a CF role (which includes PCF role holders) (the “Common Conduct Standards”), and additional conduct standards that apply to persons carrying out PCF roles and the CF-1 role (the “Additional Conduct Standards”). Similar to the FCA’s conduct rules and fitness standards discussed above, the Common Conduct Standards include a requirement for anyone in a CF role to act with “honesty and integrity” when carrying out their role in a regulated financial service provider.

In its ‘Guidance on the Individual Accountability Framework (April 2024)’ (the “CBI IAF Guidance”) the CBI provides a number of examples of what acting with honesty and integrity includes, and expressly states that it “does not intend to provide detailed guidance on what it means to act with honesty and integrity on the basis that both terms are well understood and commonly used”. The CBI also notes a link between the terms ‘honesty’ and ‘integrity’ and the F&P regime, which requires a person to be honest, ethical and act with integrity.

The CBI IAF Guidance provides some examples of integrity which include “behaving ethically by doing the right thing” and being a person who is “trustworthy and reliable, practises and encourages open and honest communication, adheres to firm policies, follows through on their commitments and takes responsibility for their actions”. Therefore, while the Conduct Standards are silent, at least directly, regarding the concept of NFM and the approach of the CBI to such misconduct, where NFM by a CF or PCF role holder involves matters such as dishonesty, non-compliance with firm policies such as codes of conduct, and generally not doing the right thing, this could be considered to be within the remit of the CBI on the basis of the Conduct Standards.

Fitness and Probity

In relation to F&P, following the publication of Andrea Enria’s report in July 2024 which reviewed the F&P regime in Ireland (the “Report”), the CBI has been busy working to improve its F&P regime by taking steps to action the 12 recommendations made in the Report (the “Recommendations”). The CBI’s F&P framework ensures that individuals in key and customer facing positions (i.e. CFs and PCFs) within a regulated financial service provider are competent and capable, honest, ethical and of integrity and financially sound. For CFs, this is a requirement of the regulated financial service provider. For PCFs, this is also an obligation of the regulated financial service provider, but with additional scrutiny by the CBI before the individual can carry out the particular PCF role.

In the Report, one of the Recommendations was for enhanced clarity of F&P standards, in particular on the approach to be adopted in “considering past events” in relation to assessing a CF’s or PCF’s F&P. In April 2025, the CBI published a number of documents and launched a consultation in relation to its review of its F&P process following the Report (covered in our briefing here). As part of the consultation, the CBI provided draft Guidance on the Standards of F&P 2025, in which the CBI advises that firms must conduct appropriate due diligence on proposed appointees in relation to “all disclosed on-going and past events, including in relation to criminal, civil, and regulatory actions”. “Regulatory actions” includes investigations by disciplinary or regulatory bodies. In assessing the impact of ongoing or concluded actions, the draft guidance requires the financial services provider to consider the relevance of the action to the relevant function. The F&P Gatekeeper Process Manual published in April 2025 also emphasises that F&P standards are to be applied in a proportionate and balanced manner when assessing an individual’s background. Therefore, if there is a matter of NFM and this calls into question the person’s honesty, ethics and/or integrity, this could impact on the person’s ability to carry out a role.

Of course, unless the matter has been identified by the regulated financial service provider through checks/searches as part of its due diligence exercise, such an assessment by the regulated financial service provider and the CBI (where relevant) will rely on the proposed or current CF/PCF holder disclosing the NFM. The individual questionnaire (“IQ”) to be completed by a proposed PCF role holder and the regulated financial service provider and submitted to the CBI contains a section specifically related to the proposed role holder’s reputation. This includes questions on whether the person, to the best of their knowledge, has been convicted of a criminal offence or subject of a criminal or civil investigation, whether the person has any information in relation to a “material issue”, information regarding disciplinary measures or whether they have been suspended, dismissed or asked to resign. Therefore, matters relating to NFM may come within these questions and require disclosure. Regulated financial service providers (including those applying for authorisation/registration) should therefore ensure that they pose similar questions to a CF and PCF candidate (and role holder on an ongoing basis) so that they can fully assess the person’s F&P. It will then be necessary for the regulated entity and the CBI, where applicable, to assess whether the NFM would have an impact on the person’s honesty, integrity and/or ethics, such that they would not be fit to carry out the role at hand.

The CBI’s work on revisions to the F&P regime is ongoing, with the CBI’s consultation on revisions to the F&P process closing recently on 12 July 2025. It, therefore, remains to be seen what the final form of F&P guidance will look like, and whether the CBI will publish any additional guidance on NFM, following the recent increased focus on this topic in the UK.

Concluding remarks

The recent authorities from England confirm that each case will turn on its own facts. This is further complicated by the fact that what might amount to a breach of conduct rules may not provide an employer with a sufficient basis on which to dismiss an employee. Employers will, meanwhile, be concerned to demonstrate that they have discharged their duties to other employees, particularly in cases involving bullying and harassment.

Firms should ensure a culture which does not tolerate NFM, have well-defined investigative and disciplinary processes and ensure they are carrying out their own due diligence on prospective and current CFs and PCFs, in order to be satisfied that those persons are fit and proper to carry out such roles, and that the regulated entity can provide the annual certification for that person in the context of the IAF Act.

Also contributed to by Anna Nurse, Kelsey Ahern and Ben Robertson