Culture and conduct the defining pillars of leadership in insurance

The Financial Conduct Authority’s (FCA) announcement on non-financial misconduct is a landmark moment for the UK insurance sector, clearly signalling that culture is no longer just the subject of a business’ internal policy but in fact, a regulatory matter with long-term reputational implications.

 At the heart of this change is a simple message, integrity is not just about running a business in a fair and transparent way but a much more holistic notion. A strong focus on ethical conduct should be front and centre for organisations. While insurers’ oversight has primarily focused on retail conduct and prudential resilience the FCA has made it clear a firm’s internal culture is now just as important to its overall compliance.

 And there is a strong reason for the introduction of the new rules. The FCA’s 2025 survey of over 1,000 financial firms found that bullying, harassment, and discrimination remain alarmingly common. These incidents are often underreported, under-investigated, and under-addressed. This landmark set of rules indicate that the FCA is calling time on this and setting the wheels in motion for an era where this is no longer the case.

What makes the new set of rules different is their broad remit and expansive scope. While non-financial misconduct has long been a focus for banks, this is the first time the FCA has made it explicitly clear that insurers (and asset managers, and other financial services firms) are equally culpable and accountable. Conduct standards are being refashioned with technical competence no longer the be all end all and instead ethics have been brought to the fore for leaders. The message is clear: culture and character matter in insurance.

 What are the next steps for insurers?

In terms of a way forward, first, insurers need to acknowledge that conduct is no longer just a human resources issue. The FCA has made it clear that non-financial misconduct is a live compliance risk. Boards now need to take ownership and governance structures need to be reviewed to ensure that bullying, harassment, or other forms of misconduct are escalated and addressed properly.

Second, the role of senior leadership is pivotal as they shape, develop, and maintain organisational culture by setting the vision, embodying values, influencing behaviours and decisions that impact the work environment and employee morale. Conduct needs to be a core part of the senior leadership team’s agenda and all need to do their part to spot low-level conduct concerns early and handle complaints with transparency. These will be core tenants of a leader’s regulatory responsibilities as they steward the firm’s reputation.

The new rules clarify that serious bullying, harassment, and violence are breaches under the FCA’s Code of Conduct (COCON) rules. Firms must also report non-financial misconduct in regulatory references and consider it during fit and proper assessments. Additional guidance is expected to address what constitutes serious misconduct, the extent to which firms should monitor employees’ private lives or social media, and how to interpret these rules.

Insurers should be aware that more intensive scrutiny will lie ahead.

Not just on how they respond to individual incidents, but also on what they are doing to build and maintain a healthy culture. This includes tracking trends, measuring resolution rates, and being transparent about outcomes. The regulator will want to see that firms are identifying root causes of issues and then acting decisively thereafter.

Being on the front foot in taking the right steps can help insurers turn the FCA’s rules into an opportunity to further instil positive ethical culture in the firms. These actions will result in a much stronger reputation for the UK insurance sector in the long-term as the new rules come into effect on 1 September 2026.

*Article previously published by Insurance post, Culture and conduct now define leadership in insurance