Picture Sarah, a junior compliance analyst at a London asset management firm. Fresh out of university, she was excited to be in the city. But soon she found her team’s atmosphere toxic. Her manager regularly shouted at her in front of colleagues, mocked her work, and excluded her from informal lunch meetings.
Sarah felt constantly anxious, dreading each day at the office. She confided in a colleague, only to learn that this manager had a history of such behaviour, moving quietly from one firm to another. This “rolling bad apple” pattern is exactly what the UK’s financial regulator wants to stamp out.
For people like Sarah, the Financial Conduct Authority (FCA) is taking note. In the past, bullying or harassment at work was often seen as an HR matter, but the FCA now treats it as serious misconduct.
In July 2025 the FCA announced that from 1 September 2026 any “serious, substantiated” bullying or harassment by senior managers will count as a breach of conduct rules. Over time such incidents must be recorded in regulatory references, so no one can escape accountability by hopping firms.
Sarah’s “hypothetical” story is one of many happening for real right now across the financial industry and serves as a wake-up call: unchecked bullying can signal deeper cultural problems and endanger trust in firms.
Rising Complaints Spark FCA Action
The numbers don’t lie and the FCA’s move to act reflects a rise in bullying complaints. The regulator’s own research – a survey of over 1,000 wholesale banks and insurers – found that allegations of non-financial misconduct, including bullying, jumped sharply from 2021 to 2023.
In that period, 26% of concerns reported by firms were bullying or harassment, and 23% were discrimination; the remaining 41% were other misconduct.
Put bluntly, over a quarter of all personal misconduct reports involved bullying.
Yet firms often failed to act. Only about 43% of reported complaints led to formal discipline, meaning many cases were left unresolved.
The consequences of inertia became stark when the FCA found that 93 individuals already had their “fitness and propriety” status affected by past misconduct, even though it was non-financial in nature.
In short, big employers could no longer treat bullying as a minor issue, it was showing up on the regulatory radar.
As FCA Deputy CEO Sarah Pritchard warned, a culture where bullying goes unchallenged is “one of the reddest flags” in a firm, raising serious questions about decision-making and risk management. The regulator’s goal is to prevent these “rolling bad apples” from hopping between firms without consequences.
FCA’s New Rules from September 2026
The FCA will formally extend the Senior Managers & Certification Regime (SM&CR) to cover bullying, harassment, and violence.
As of 1 September 2026, around 37,000 regulated firms (beyond just banks) must treat serious bullying or harassment as reportable misconduct.
This includes reporting to the FCA and noting it in any future due diligence on senior hires.
Previously, only banks had to report such personal misconduct, but the new rules capture a much wider range of firms – hedge funds, insurers, pension providers and more.
Under the updated rules, firms must update their conduct codes and job descriptions to define bullying and harassment explicitly, linking them to regulatory expectations.
Internal investigations into complaints must be thorough and fair, with outcomes documented not just for HR files but potentially for regulatory reference requests.
If a senior manager’s team tolerates such behaviour, the manager must be able to show they took “reasonable steps” to prevent it, or risk having their own fitness questioned.
In practice that means board-level and senior leadership accountability: regulators will expect evidence of a safe culture, adequate training, and prompt handling of complaints.
Failure to address bullying now carries a dual risk – from the tribunal system and from regulatory sanction.
How This Fits Within the Current UK Legal Landscape
This regulatory crackdown dovetails with existing UK law. Employees already have several protections: Harassment based on protected characteristics (age, sex, race, religion, etc.) is unlawful under the Equality Act 2010.
Employers also have a long-standing health and safety duty under the Health & Safety at Work Act 1974 to protect workers’ mental and physical welfare. That duty includes preventing stress, harassment, and bullying.
Despite these protections, pure “bullying” (i.e. unfair, hostile treatment not based on a protected class) has remained a grey area.
Acas notes that “there is no specific law against bullying” in general, and currently workers can only challenge it at an employment tribunal by claiming unfair dismissal or constructive dismissal.
This gap is the focus of the new Bullying and Respect at Work Bill currently moving through Parliament. That proposed law would create the first statutory definition of bullying and give victims a direct route to legal remedy.
Crucially, if an employee is dismissed for complaining about or suffering bullying, the bill would make such a dismissal automatically unfair, with no two-year service requirement.
It would also empower the Equality and Human Rights Commission to investigate toxic work cultures and enforce corrective measures. Although this Bill is not law yet, it signals growing legislative backing for the FCA’s stance.
For employees, the practical effect is this: you have long been protected from harassment based on who you are, and now even general workplace bullying is being treated as a professional and regulatory issue.
According to Acas, employers have a legal duty of care to protect staff from harm, which “includes dealing with bullying issues”.
In turn, workers have a right to be treated with respect and not to face victimisation for speaking up. If you face bullying, you can raise grievances internally; if that fails, Acas helplines and employment lawyers can advise on constructive dismissal or unfair dismissal claims, especially as the law changes.
Practical Steps for Employers and Employees
- Treat Bullying as a Risk: Don’t view it as just “office politics.” Unaddressed bullying undermines morale, productivity, and trust. The FCA and regulators now see it as a business risk that can damage a firm’s integrity.
- Clear, Updated Policies: Define bullying and harassment clearly in codes of conduct and contracts. A standalone Respect-at-Work policy can complement existing equalities and grievance procedures. Make sure employees know how to report issues and that all reports will be taken seriously.
- Training and Early Intervention: Train all staff and managers on spotting bullying and bystander intervention. Leadership training should emphasise fair, respectful management. Early warning signs (isolation, fear, high turnover) should trigger reviews. Encourage active bystanders to safely raise concerns.
- Leadership Accountability: Senior managers must model good behaviour. Track simple metrics – e.g., number of grievances, exit interview feedback or staff surveys – to spot troubled teams early. Regulators will expect evidence that top leaders “took all reasonable steps” to maintain a healthy culture.
- Consistent HR/Regulatory Processes: If an incident occurs, investigate thoroughly and document outcomes. Ensure disciplinary actions are fair and proportionate. Keep detailed records since proven misconduct may need to be disclosed in references or regulatory notifications. Stay alert to legal changes: consult HR or employment law specialists on any new statutory obligations.
- Encourage a Speak-Up Culture: Ultimately, the best prevention is an open, respectful workplace. Reassure employees they can report bullying without retaliation. As one FCA official noted, healthy workplace cultures are essential – when misconduct is allowed to persist, it “undermines trust and confidence” in the firm.
Proactive companies are already integrating these steps. For example, updating job descriptions to reference zero-tolerance of bullying, or embedding anti-bullying clauses in senior managers’ mandates.
Others run regular staff surveys and appoint “culture champions” to monitor team health. Such measures not only address legal and regulatory requirements but also improve engagement and performance.
As Acas advises, employers should “do all they can to try to prevent bullying happening” and take every complaint seriously.
The FCA’s approach provides a model for other industries where trust, professional judgement, and safety are critical, such as healthcare, education, and law enforcement. Regulators in these fields are increasingly recognising that toxic or hostile workplaces discourage employees from raising concerns and prevent organisations from addressing and learning from misconduct.
Time to Act: Get Specialist Support from Magara Law
The FCA’s crackdown makes it clear: financial firms (and indeed any employer) can no longer afford to ignore workplace bullying.
For employees, there are now stronger routes to raise concerns, from updated legal protections to regulators who are actively paying attention. If you are facing harassment or intimidation, document what is happening, use internal channels, and don’t hesitate to seek advice.
For employers, this is a moment of reckoning. The FCA and other bodies now see bullying as more than a cultural concern, it’s a conduct issue, a regulatory risk, and a test of leadership credibility.
Policies and training are not enough unless they translate into action. Review your processes, train your managers, and make culture a board-level conversation.
Ultimately, building a respectful workplace isn’t just good practice, it’s becoming a legal and regulatory obligation.
Those who act early will avoid the reputational, financial, and legal fallout that comes with doing too little, too late.
Why Contact Magara Law?
Because policy alone won’t protect you, but preparedness will.
- Magara Law helps both employers and employees take action before things escalate. Whether you are dealing with a live concern, facing internal pressure, or simply want to get ahead of what’s coming, we will give you clear, confident advice that works in practice.
- For employers: robust policies, leadership-focused training, and investigations that stand up under legal and regulatory scrutiny.
- For employees: guidance that protects your position, and your peace of mind, when speaking up feels risky.
Get in touch today for confidential, specialist advice. Don’t wait for a claim, complaint, or regulatory inquiry to force your hand. Let’s get it right before risk becomes reality.