FCA enforcement action highlights focus on non-financial misconduct

Orla Hubbard and Lisa Carty, financial regulation and enforcement specialists at Pinsent Masons, were commenting following the decision to fine the founder and majority shareholder of Odey Asset Management LLP (OAM) £1.8 million and ban him from the UK financial services industry for a lack of integrity.

It comes as the FCA continues to increase its focus on non-financial misconduct, with the regulator indicating that senior managers should expect increased regulatory scrutiny regarding how their conduct outside work may impact their fitness and propriety to carry out senior roles in regulated firms.

In this case, Odey was found to have breached the FCA’s Individual Conduct Rule 1, which mandates that individuals must act with integrity. The FCA’s investigation revealed that between December 2021 and November 2022, Mr Odey engaged in actions deliberately designed to frustrate OAM’s ongoing disciplinary process into his conduct. The disciplinary process was initiated following allegations of sexual harassment of female employees over a 15 year period and one allegation of sexual assault on a female employee.

However, the FCA’s investigation in this case was not focused specifically on the alleged sexual harassment or assault. Instead, the FCA’s investigation regarding Mr Odey’s “integrity” was focused on his attempts to interfere with the internal disciplinary process which was taking place in respect of those harassment allegations, including by firing the entire executive committee of his firm, OAM.

Carty said: “The scope of the FCA’s enforcement action against Mr Odey for non-financial misconduct highlights an interesting distinction. The FCA investigation focused on the more traditional elements of his misconduct, such as his actions regarding the disciplinary process. This would suggest that the regulator is more comfortable imposing sanctions on individuals for non-financial misconduct where this can be clearly tied back to a breach of more traditional regulatory obligations.”

The FCA intends to publish a policy statement on non-financial misconduct in June 2025 which is expected to clarify its expectations as to how firms should monitor and investigate non-financial conduct issues by senior individuals. Non-financial misconduct includes behaviours such as bullying, harassment, discrimination, and other forms of inappropriate conduct that can undermine workplace culture and harm stakeholders.

Hubbard said: “It remains to be seen whether the FCA may feel empowered to broaden the scope of future investigations where non-financial misconduct has been a factor potentially impacting an individual’s integrity. Regulators in Ireland and elsewhere will no doubt be watching the FCA’s approach closely.”

Odey has challenged the FCA’s findings and referred the decision notice to the Upper Tribunal.