This blog post was first published by Law360 on September 17, 2025. 

On 2 July 2025, the UK Financial Conduct Authority (FCA) published its latest non-financial misconduct (NFM) policy statement¹, which clarifies that bullying, harassment and violence qualify as misconduct under the FCA’s Code of Conduct rules and will apply to almost all financial services firms operating in the U.K. from 1 September 2026. The announcement comes amid a recent surge of high-profile workplace misconduct cases on both sides of the Atlantic, highlighting a growing transatlantic divergence between the legislative, political and regulatory approach to non-financial misconduct (NFM) in the U.S. and U.K. This trend appears likely to continue.

From financial services, to IT, media and the extractive industries, companies across a broad range of sectors have suffered from negative publicity regarding sexual harassment, bullying, and other workplace misconduct. In the U.K., NFM is an increasingly prominent item on the agenda of regulators such as the FCA and Solicitors Regulation Authority (SRA) and legislators alike. Their messaging has been clear: Companies need to do more to prevent sexual harassment, discrimination, and bullying, and to promote diversity, equity and inclusion (DEI). At the same time, a different picture is crystalizing across the Atlantic, as the Trump Administration issues executive orders seeking to eliminate DEI programs in the public and private sectors.

For businesses operating in the U.K., U.S. and beyond, varying standards across jurisdictions present difficulties when setting global policies, procedures and compliance programs designed to address non-financial misconduct, particularly when the applicable rules and legislation in each jurisdiction are changing rapidly. We discuss below some recent developments and trends in both the U.S. and U.K., followed by practical tips on how companies can get in front of such issues.

U.K. Workplace Conduct

A host of U.K. regulators, including the FCA and SRA, are showing an increasing interest in, and interventionist approach towards, workplace conduct issues that would historically have been left to companies to address. 

On 2 July 2025, the FCA published its latest NFM policy statement², which clarifies that bullying, harassment and violence qualify as misconduct under the FCA’s Code of Conduct rules and will apply to almost all financial services firms operating in the U.K. from 1 September 2026. The FCA has made clear that regulated firms must treat NFM as misconduct and act accordingly by updating policies and procedures, taking disciplinary action, providing training and encouraging a ‘speak up’ culture in which NFM is not tolerated. The FCA’s aim is for its new rules to advance equality, reduce harassment and discrimination within financial services firms, and encourage firms to create more inclusive working environments³.

Finalized guidance from the FCA on this topic is expected before the end of 2025 and the proposed guidance published in July, in the same publication as the policy statement, covers topics that have not previously explicitly fallen into the regulatory sphere. For example, misconduct by a regulated person in relation to a fellow member of the workforce at a social occasion organized by an employee outside of work, such as an employee’s birthday party, would not fall within the scope of the FCA’s Code of Conduct.

This contrasts with the approach many organizations have taken in the U.S., where inappropriate conduct toward a co-worker at, for example, a “happy hour” not officially sponsored by the company would likely provide a basis for investigation and discipline if such conduct may have an impact on the workplace.

Importantly, however, although the FCA’s Code of Conduct does not apply to misconduct in such instances in the U.K., it could be relevant to the FCA’s assessment of an individual’s fitness and propriety to perform their role within a financial services firm⁴.

Further, under the Worker Protection (Amendment of Equality Act 2010) Act 2023, effective from October 2024, employers across all sectors are required to take “reasonable steps” to prevent sexual harassment of their employees. When sexual harassment does occur, employers are expected to take action to prevent future instances of harassment; for example, by taking corrective action against the subject, enhancing or introducing refresher respectful workplace conduct training and/or enhancing policies and procedures.

U.S. Workplace Conduct

While legislators and regulators in the U.K. are heightening pressure on companies to address NFM, a different trend is emerging in the U.S. On Day 1 of his Administration, President Trump revoked 78 Biden-era executive orders that focused on advancing equity and combatting discrimination for various groups, and directed the leaders of each federal agency to “take immediate steps to end Federal implementation of unlawful and radical DEI ideology.” ⁵

On the same day, he issued another order stating that it is now “the policy of the United States to recognize two sexes, male and female”—which excludes transgender, nonbinary, and intersex people from receiving certain protections.⁶

On Day 2 of his Administration, President Trump issued an executive order “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (the Order), which focuses squarely on DEI programs in the private sector. The Order refers repeatedly to “illegal” DEI practices, which are not defined, and asserts that such practices violate U.S. anti-discrimination laws.

The U.S. Department of Justice (DOJ) and Equal Employment Opportunity Commission (EEOC) have since jointly released two technical assistance documents providing additional color on what constitutes unlawful DEI.  That guidance, however, leaves room for employees (and outsiders) to contest apparently lawful practices based on their implementation and are not legally binding.⁸

The Trump Administration’s approach to DEI is particularly relevant for companies that have federal government contracts, but it has implications for companies in the private sector more broadly. For federal contractors, the Order revokes a nearly 60-year-old order that prohibited discrimination in federal contracting and that required federal contractors to develop affirmative action plans and ensure equal opportunity.⁹

The Order also states that government contractors and grant recipients must certify in their contracts that their DEI programs do not violate applicable anti-discrimination law and agree that such certification is material for purposes of the U.S. False Claims Act. 

These new requirements create heightened risks for contractors; financial penalties under the False Claims Act can be high and there are also incentives for private citizens to bring claims under this law.

The Order also goes beyond federal contracting and instructs federal agencies to look at private sector DEI initiatives more broadly. The Order instructs the Attorney General to work with agencies and issue a report that, among other things, identifies “egregious and discriminatory DEI practitioners” and to take steps to “deter DEI programs and principles” that “constitute illegal discrimination”—through litigation, investigations, and other actions. 

As part of that effort, each federal agency is to identify “up to nine potential civil compliance investigations” of publicly traded corporations, nonprofits and universities, among other entities.  

Litigation and other action by organizations such as America First Legal, which was run by Stephen Miller, the now Deputy Chief of Staff for Policy at the White House, provide a preview of the kinds of programs and initiatives that will likely be scrutinized by government agencies.  These include representation goals, executive compensation incentives tied to representation, race-conscious fellowships and internship programs, mentoring and training programs that are race-conscious in design, racial equity and LGBTQIA+ focused training, supplier diversity programs, and philanthropic giving or grant making.

The Trump Administration has taken the view that its executive orders on DEI apply beyond the US borders. In April 2025, the Administration sent letters to several large companies in the EU warning them that they must comply with an executive order banning diversity, equity and inclusion programs. According to a report in the Financial Times, the letters said that Trump’s executive order applied to companies outside the U.S. if they were a supplier or service provider to the American government,  directing EU companies to attest to their compliance with U.S. anti-discrimination laws and to acknowledge that such certification is material for purposes of the government’s payment decision and therefore subject to the False Claims Act.¹⁰

Addressing Diverging Approaches to Workplace Conduct 

While the current U.S. and U.K. governments may be steering their respective countries in different directions regarding NFM, there are six pillars of an effective workplace compliance program that can be used as a global framework for promoting respectful and inclusive workplace cultures, with bespoke content per jurisdiction where necessary.

The Six Pillars of an Effective Compliance Program

1. Policies & procedures should set expectations about appropriate workplace behavior, what behavior falls within the policy’s remit and what behavior violates company policy, tailored to each jurisdiction where there are differences.
2. Multiple reporting channels should be in place, including whistleblower and/or anonymous options.
3. Investigations processes and procedures should ensure thorough and fair handling of misconduct allegations. How companies investigate and respond to misconduct allegations is one of the most telling features of a company’s workplace compliance culture and one that regulators in both the U.S. and U.K. will use to assess compliance culture. Tracking cases is important as it allows companies to identify trends and issues and take prompt action before issues spiral.
4. Disciplinary action and remedial measures should be taken appropriately and consistently to demonstrate effective implementation of policies and procedures, encouraging a culture in which workplace misconduct is not tolerated.
5. Training and education should be regularly offered to employees and refreshed as necessary based on the jurisdiction.
6. Governance and oversight processes should be in place to escalate serious NFM cases or trends to management and the Board, as appropriate. Tone at the top matters, and it is important that senior leaders have visibility into workplace misconduct issues so that they can ensure the organization takes appropriate action to address it.

Conclusion

Although it can be difficult to navigate diverging legislation, political and regulatory stances, establishing a consistent framework for promoting a healthy workplace culture is an important first step for global organizations.  Companies should also ensure that they have mechanisms for regularly monitoring the evolving legal and regulatory landscape across jurisdictions and incorporate jurisdiction-specific nuances into their policies, training, and practices.

US companies operating in the UK, particularly those in FCA-regulated financial services, need to ensure they are aware of the nuances of the FCA’s new rules on NFM and consider the details of any finalized guidance. There are likely to be differences between the two jurisdictions in the circumstances when, for example, an employer is obliged to investigate, address and consider allegations of NFM for fitness and propriety assessments. In the UK, notification requirements to the FCA and whether information about NFM needs to be included in regulatory references also need to be considered. FCA-regulated firms operating in both jurisdictions need to ensure that any practical guidance and training offered to employees is tailored to each jurisdiction to ensure employees are clear on when their actions, and any potential misconduct, will fall within the scope of the FCA Code of Conduct and when it will not, but may still be relevant to an assessment of fitness and propriety and could, therefore, affect their ability to work in financial services.

For UK and European companies operating in the US—particularly those with federal government contracts or who are part of the federal supply chain—it is critical to stay informed of executive orders and agency guidance concerning DEI. The Trump Administration has made clear that it expects compliance not only domestically but also from international companies with U.S. ties, and has introduced significant legal exposure through DEI certification requirements, including potential liability under the U.S. False Claims Act. These developments can have broader implications beyond legal compliance: the risk of public scrutiny, amplified by the Trump Administration’s communications strategy, means that missteps—real or perceived—can quickly become high-profile reputational issues. In this environment, UK and European companies must balance their home-market commitments to DEI and inclusion with careful legal and cultural navigation in the US, ensuring that their values, policies, and messaging are both locally compliant and globally consistent.

Footnotes:

1. Tackling non-financial misconduct in financial services CP25/18 including Policy Statement on amendments to the Code of Conduct (COCON): https://www.fca.org.uk/publication/consultation/cp25-18.pdf.
2. Tackling non-financial misconduct in financial services CP25/18 including Policy Statement on amendments to the Code of Conduct (COCON)
3. Tackling non-financial misconduct in financial services CP25/18, paragraph 1.33
4. Fitness and propriety assessments are annual requirements for individuals to hold certain roles in financial services in the UK. If an individual is not assessed as ‘fit and proper’ they cannot hold these roles. 
5. Initial Rescissions of Harmful Executive Orders and Actions (January 20, 2025)
6. [Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government (January 20, 2025)]
7. Ending Illegal Discrimination And Restoring Merit-Based Opportunity – The White House
8. What You Should Know About DEI-Related Discrimination at Work | U.S. Equal Employment Opportunity Commission; What To Do If You Experience Discrimination Related to DEI at Work | U.S. Equal Employment Opportunity Commission
9. Executive Order 11246
10. https://on.ft.com/4lmVgT8