01.05.2026

The September 26 Countdown: Why Compliance and HR Must Finally Break the Silos

With the 1st of September 2026 fast approaching, the UK financial services sector is facing one of the most significant shifts in the Senior Managers and Certification Regime (SMCR) since its inception.

The Financial Conduct Authority (FCA) has made its message clear: Non-Financial Misconduct (NFM) is misconduct, plain and simple. For years, many firms have treated Compliance and HR as two separate engines running on different tracks, Compliance managed the “regulatory” rules, while HR handled “people” issues.

However, the new NFM rules, which bring bullying, harassment, and violence explicitly under the Code of Conduct (COCON), make this separation a major regulatory risk.

The New Reality: NFM as a Regulatory Breach
From September 2026, serious non-financial misconduct will no longer be “just an HR matter.” It will be a potential breach of Individual Conduct Rule 1 (Integrity) or Rule 2 (Due Skill, Care and Diligence).

For the 37,000 non-bank firms being brought into alignment with banking standards, the stakes are high. A failure to address a toxic culture or a “rolling bad apple” isn’t just a threat to your reputation, it’s a direct threat to your firm’s regulatory standing and the Fitness and Propriety (FIT) of your Senior Managers and Certified Staff.

Why the “Silo” Approach Fails
When HR and Compliance don’t work in tandem, the gaps in the SMCR framework become very risky:

  • Inconsistent Reporting: HR may resolve a grievance internally without Compliance ever knowing a “Conduct Rule breach” assessment was required.
  • The “Fit and Proper” Blind Spot: Annual certifications might be signed off by Compliance while HR holds records of disciplinary warnings that should have triggered a “not fit and proper” finding.
  • Regulatory Reference Risk: Under the new rules, firms must share substantiated cases of serious poor personal behavior in regulatory references. Without a shared data flow, firms risk providing inaccurate or incomplete references.

Hand-in-Hand: Building a Unified Front
To remain compliant by September, your departments must move from “co-existing” to “collaborating.”

Compliance and HR must integrate their workflows across several key areas. Fitness and Propriety assessments will now require HR to share disciplinary logs and background checks with Compliance, who must ensure these meet the rigorous FCA standards. When it comes to Breach Management, HR’s investigation into employee grievances must feed directly into the Compliance team’s determination of whether a formal Code of Conduct (COCON) breach has occurred and requires regulatory reporting.

Finally, a unified approach to Culture and Training is essential; while HR focuses on embedding firm values and soft skills, Compliance provides the technical training on Conduct Rules and monitors the “reasonable steps” taken by Senior Managers to prevent misconduct.

How PeopleClear Can Help
The countdown to September 26 has started, and the firms that thrive will be those that view HR and Compliance as the dual guardians of their culture.

To support firms in this transition, PeopleClear is offering high-level and affordable SMCR diagnostics and gap analysis. Our goal is to ensure your frameworks are robust, your silos are broken, and your firm is fully prepared for the NFM changes.

If you are keen to learn more about how we can help you get ready, please contact James Miller at [email protected]