On September 1, 2026, the FCA’s new non-financial misconduct rule took effect – and there is no transitional period. Serious bullying, harassment and violence are now a standalone prohibition in the individual conduct rules (COCON). While major banks have operated under robust conduct frameworks for years, the new rule extends directly to non-bank financial firms – including private credit – bringing them within the same regulatory perimeter. The FCA has made clear it will draw no distinction in its enforcement approach.
Why Private Credit Firms Are Particularly Exposed
The regime’s impact will not be felt evenly. Private credit firms often have lean compliance teams, limited HR infrastructure and performance-driven cultures where a small number of senior individuals generate the bulk of revenue. That combination creates exactly the risk profile the FCA has singled out. Firms that enforce conduct standards against junior staff but tolerate equivalent behaviour from commercially important figures face, in the regulator’s words, a governance failure. Add to this the complexity facing firms within international groups, where headquarters-driven HR policies may fall short of FCA standards, and the exposure becomes acute.
The Practical Bite: Reinforcing Mechanisms
The conduct rule does not operate in isolation. It is reinforced by the expanded fitness and propriety framework – now expressly capturing non-financial misconduct in or outside the workplace – and by enhanced regulatory reference requirements. Disciplinary findings for conduct rule breaches must be recorded in a departing employee’s regulatory reference, creating a permanent, career-damaging record. The combined effect is a regime with real teeth: misconduct can trigger a conduct rule breach, loss of approved person status and lasting industry consequences.
The Hard Judgement Calls
The regime is outcomes-based, leaving genuine grey areas. When a senior dealmaker is accused of sustained intimidation mid-transaction, what level of investigation is proportionate before interim measures are taken? Where does demanding portfolio management end and bullying begin? And while private conduct falls outside the conduct rule, the fitness and propriety guidance captures such issues as threatening behaviour on personal social media – even where it has no workplace nexus. Overcautiousness carries its own risks: an unduly low threshold for recordable findings can generate tribunal exposure, reputational harm and a chilling effect on the workforce.
Immediate Priorities for In-House Teams
The FCA expects firms to have been ready on day one. In-house legal teams should consider the following. Do our investigation protocols meet a regulatory standard, or do we still rely on informal conversations and managed exits? Have our senior managers been briefed on their personal exposure? Can we produce a contemporaneous audit trail for every allegation? And critically, would we apply the same standards to our top-performing portfolio manager as to a junior analyst? The FCA will. Differential treatment by seniority or commercial value is the single most visible red flag for enforcement.
The cost of inaction is already accruing. This is not an area where firms can afford to wait for precedent before they act.
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