Reported non-financial misconduct incidents in the UK insurance sector rose by 134% between 2021 and 2023. The data comes from a Financial Conduct Authority (FCA) survey of 1,028 wholesale firms. Wholesale brokers recorded a 139% increase over the same period. Yet disciplinary action was taken in only 43% of cases overall.
Those figures sit at the centre of a live supervisory campaign. As of October 2025, the FCA had 76 open supervisory cases tagged as relating to non-financial misconduct. Insurance accounted for 15 of those cases. Supervisory case volumes have risen year on year: 123 in 2022, 168 in 2023, and 229 in 2024.
The regulator has said it will treat unchallenged misconduct as a red flag for broader cultural failings that undermine decision-making and risk management.
The FCA confirmed in October 2025 that it is taking forward supervisory work across the wholesale brokers portfolio. The focus is on whether firms’ detective and preventive controls are working at an operational level, not just on paper.
The governance picture is stark. An FCA survey found that 38% of respondent firms had no board-level visibility of non-financial misconduct management information. A further 33% had no formal governance structure to decide outcomes or disciplinary actions.
In the Lloyd’s market specifically, 44% of insurers and 26% of intermediaries had no board-level oversight of misconduct at all.
The FCA also noted that 16% of the largest London market insurers reported zero misconduct incidents between 2021 and 2023. The regulator intends to follow up with those firms. Zero reports are more likely to indicate under-detection than a clean culture.
New rules on non-financial misconduct take effect across UK financial services on 1 September 2026. The FCA is extending the regime to approximately 37,000 additional regulated firms.
The Personal Investment Management and Financial Advice Association (PIMFA) has published a guide to help firms apply the new framework. It was developed with the Chartered Insurance Institute (CII), the Chartered Institute for Securities and Investment (CISI), and law firm Clyde & Co.
The FCA’s updated Handbook rules cover workplace behaviour including harassment, bullying, discrimination, victimisation, and alcohol or drug abuse. The regulator has said such cultures can facilitate wider wrongdoing and harm both markets and consumers.
The PIMFA guide addresses grey areas where firms must exercise judgement. These include the boundary between work and private life and the relevance of social media activity. It also identifies when non-financial misconduct may breach the Conduct Rules or affect an individual’s fitness and propriety.
The FCA’s final policy statement, PS25/23, confirmed that new guidance under the Conduct Rules comes into force on 1 September 2026. The regulator said its policy work on non-financial misconduct is now complete.
Its focus has shifted to whether firms are tackling misconduct in practice. Of the firms that responded to its consultation, 95% supported the publication of further guidance.
From September 2026, verified incidents must be disclosed through regulatory references when staff move between firms.
The Employment Rights Act 2025 adds further complexity. The unfair dismissal compensation cap falls away in January 2027. The CII has warned this may carry direct implications for reinsurers. Excess limits under reinsurance treaties could be breached in ways underwriters had not anticipated when those treaties were written.
Legal analysis from HFW found that non-financial misconduct claims are increasingly relevant to employment practices liability lines. Those lines are commonly packaged alongside directors’ and officers’ cover. The removal of the compensation cap may cause claims to exceed layers that underwriters had not previously considered at risk.
Tracy Vegro, OBE, chief executive of CISI, said trust in financial services depends on behavioural standards as well as technical competence.
“The FCA’s rules on non-financial misconduct are an important step in reinforcing that message: poor conduct, bullying or harassment have no place in a profession built on integrity and public confidence,” she said.
Liz Field, chief executive of PIMFA, said the guide gives firms practical support in meeting FCA expectations. She said the sector needs to build workplace cultures that match its financial and personal responsibilities.
The guidance is available to PIMFA member firms ahead of the September 2026 implementation date.
