The UK has taken important steps to crack down on harassment, bullying and cover-ups that could put office life at risk for many.
Advocates say reforms that widen rules regarding fraud in financial services and prevent businesses using “coagulation clauses” to silence victims of harassment will make workplaces safer and more harmonious.
However, the changes have been criticized in some quarters. Opposition politicians are suing “mission creep” by regulators that threaten economic growth.
The lawyer warns that managers can find themselves responsible for the bad behavior carried out by the people they oversee, even if they don’t know about it. Some people are worried that employers will try to pry up employees’ personal lives and social media activities.
The first major change came from the Financial Conduct Bureau, which said it would expand rules on non-financial fraud beyond banks, expanding to the other 37,000 financial services groups that will be regulated from September 2026.
The regulator said it aimed to tackle the “bad apples of rolling” issues of people moving between financial services companies to avoid the impact of their actions.
That rule means that future employers must report serious cases to regulators recorded in person’s references for viewing, which could lead to senior management positions that are banned from financial services because they are no longer deemed appropriate and appropriate.
Watchdog said the new approach is designed to not replace or complement criminal law or the company’s own disciplinary process and employment court cases. He added that the changes will only apply to subsequent events, not retrospectively.
Separately, the government-supported amendments introduced last week in the Employment Rights Bill will void and void non-disclosure agreements if used when employees are subjected to sexual harassment and discrimination.
The provisions would also allow those who witness harassment to “call it” without the threat of being sued, the government said. Employees will be able to request an NDA to do after a traumatic ordeal.
The move follows politicians’ calls for regulators to do more to tackle financial services harassment and bullying after a series of famous incidents highlighted in the wake of the #MeToo movement.
“It’s been building up for a while, and non-financial misconduct has been a subject of regulatory agenda for years,” said Daniel Parker, a counsel for employment and partnerships at Fosters. “This is a useful clarification we’ve been waiting for.”
A survey of more than 1,000 financial companies issued by the FCA last year saw a two-thirds increase in reports of non-financial misconduct, with 7.2 incidents per 1,000 employees in 2023, up from the 4.2 incident in 2023.
Reported complaints ranged from sexual and racial harassment to illegal drug use and offensive language. Watchdog warns that private contracts should not prevent people from reporting fraud to authorities. However, the NDA said some of the non-financial fraud settlements appear to be declining in popularity, and found 51 instances at a company they surveyed in 2023, from 87 years ago.
The FCA said the rules should only cover “serious instances” of fraud to avoid excessive emissions of “minor incidents of inferior workplace behavior.” It targets activities in work environments that are violent, violate human dignity, or creates “intimidating, hostile, degraded, humiliating, or offensive.”
The change will make it easier for regulators to deal with non-financial fraud. The FCA initially hesitated to intervene after hedge fund founder Crispin Odey was accused of sexual harassment and assault. When Watchdog imposes a fine and bans it a few years later, the Odey Asset Management boss did so not in any way beyond the allegedly frustrating the internal disciplinary proceedings.
But critics complain that the change drags businesses to crack down on employees’ behaviour and makes controversial judgments about what is acceptable.
“We are committed to providing a range of services to our clients,” said Catriona Watt, partner at law firm Fox & Partners.
“As a culture of cancellation is widespread, the rules warn that when attacks are seen, senior management will place a heavy personal burden on senior management to take action in potentially vague circumstances,” said Christine Braamskamp, managing partner at law firm Jenner & Block.
For Tim Lewis, head of financial services and markets at law firm Travers Smith, change could be liable for allowing harassment and bullying to occur amongst the staff he oversees.
“How prepared are regulators in terms of assigning liability when bullying or harassment occurs?” Lewis said. “There’s one thing that the perpetrator is liable for, but putting the manager responsible for allowing it is a whole other thing.”
But others believe this rule will help you cheate on the spotlight. “My behavior has improved a lot,” said a senior city advisor in London. “Everyone had a horror story, but that doesn’t mean it’s gone entirely. Let me remind you of acceptable behavior and that you don’t have to do it regularly yet.”
Opposition politicians are calling for regulatory over-earning. “This is Grade A mission creep, a perfect example of the unintended consequences of too many paychecks, deep ‘waking up’ and public sector regulators doing their job for themselves.”
While such misconduct is “unacceptable,” fellow Tory MP and former mayor John Glen said, the FCA’s priority is “to remove material costs from reports and enable economic growth.”
Senior City Advisor suggested that the FCA “focus on the name F.”
However, the FCA refused the barb. “There was widespread support for our work in this field, including 80% of the companies that responded to our consultations,” it said.
“There is a widespread perception that modest harassment and bullying can demonstrate a poor culture, leading to concerns about risk management and management for businesses,” WatchDog added. “It has created risks for consumers and the market, leading to corporate failures.”
