If your response to the FCA’s new Conduct Rules is policy and training, you may be addressing the wrong end of the problem
Imagine you are sitting in a small meeting.
A new senior leader has recently joined the organisation to take responsibility for a significant part of the business. The organisation has clear values. Respect matters, and Bullying is unacceptable. The policies are unambiguous. People have been trained.
During the meeting, the new leader turns on one of your colleagues. This is more than a robust challenge. More than a difficult conversation or an uncomfortable piece of feedback. The colleague is belittled and humiliated in front of the room.
Everyone sees it.
What happens next?
Does somebody challenge it there and then? Does someone speak to the leader afterwards? Does somebody raise it with their manager, HR or another senior leader? Or does everyone leave the room, talk about what happened privately — and carry on?
Because what happens next may tell you considerably more about the culture of the organisation than its policy does.
Something changed on 1 September
The FCA’s new rules and guidance on non-financial misconduct came into effect on 1 September 2026.
Among the changes, serious bullying, harassment and violence between colleagues can now fall within the Conduct Rules where the relevant tests are met. The FCA has also clarified how relevant non-financial misconduct can be considered when assessing whether someone is fit and proper.
The FCA is clear that firms should have considered what changes are needed to policies, Conduct Rule breach reporting, Fit & Proper assessments and regulatory references, and should ensure that staff and managers understand the changes.
All of that matters.
Yet I wonder whether there is a danger that organisations address the part of the problem they are most comfortable addressing. Update the policy. Review the process. Issue some communications. Put managers through training. Tick the box.
What if that is addressing the wrong end of the problem?
The policy was probably never the problem
I have spent much of my working life in financial services. Over those years, I have seen culture change enormously. There are behaviours that were once tolerated in organisations that would quite rightly be considered completely unacceptable today.
Looking back, one thing strikes me. Very often, people knew.
They knew that a particular behaviour was inappropriate. They knew when somebody had crossed a line. They knew when a colleague had been treated badly. Sometimes they said nothing, and when they did, often nothing was done about it.
It was not necessarily because there was no policy. It was because that was the way it was.
That is culture.
At Co-Labpeople, we describe an important distinction in our Culture-Performance System:
Structure defines how work should happen.
Culture influences how it actually happens.
Policies, processes and formal controls sit on one side. Behaviours, judgement and decision-making sit on the other. That distinction feels particularly relevant now.
The FCA is regulating conduct. Conduct does not happen in a vacuum.
The interesting leadership question is therefore not simply:
“Do we have the right policy?”
It is:
“What is happening within our culture that makes unacceptable conduct more or less likely — and influences what happens when people see it?”
Think again about that meeting.
Whether somebody speaks up will potentially be influenced by trust and psychological safety. The behaviour of other leaders will matter.
What happened the last time somebody challenged a senior person about behaviours? After all, sometimes to create change we just need to 'call it out'. This simple action can help bring our unconscious behaviours into consciousness and create change. People can change.
Do managers really welcome challenge? Does status change the rules? Do people believe there will be consequences? Are the organisation’s stated values actually reflected in everyday leadership behaviour?
These are not policy questions. They are culture questions.
And that is why I believe the new FCA rules should prompt something more profound than a compliance response.
Awareness comes first
When I think about some of the cultural problems I have witnessed during my career, many could have been addressed through three relatively straightforward stages:
Awareness + Agree Actions + Implementation.
The first is easily overlooked.
Before leaders can change culture, they need to understand the culture they actually have. Not simply the culture described on the website. Not the values written on the wall. Not necessarily even what the executive team believes the culture to be.
The culture people experience.
That means understanding whether people feel respected. Whether they trust their leaders. Whether they can challenge. Whether managers create psychological safety. Whether accountability is consistent. Whether people feel able to speak when something does not feel right.
Our Culture-Performance System describes this as a relationship between Culture Drivers → Culture Behaviours → Culture Outcomes.
The conditions people experience influence behaviour. Behaviour influences decisions. And decisions ultimately influence outcomes — including performance, wellbeing and regulatory outcomes.
That is why culture needs to be understood as a performance system, rather than simply an HR initiative.
So perhaps we should measure it
Working with our partners at Cultiv8tiv
, Co-Labpeople has developed a culture survey solution for financial services that helps leadership teams look beneath the outcomes and understand the cultural conditions and behaviours that may be driving them.
The FCA’s new rules may prompt firms to review their policies, processes and training. Perhaps they should prompt a more fundamental question.
What happens when someone crosses the line?
Do people speak up? Does someone call it out? Do leaders act? Or does everyone know — and nothing happens?
Because perhaps the real test of your culture is not what you say should happen. It is what actually happens.
I will come back to that.
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