This article is part of the Autumn 2026 edition of Financial regulation quarterly, which covers practical insight on the regulatory developments in the sector.

By a judgment dated 10 September 2026, the Upper Tribunal held in Odey v Financial Conduct Authority (FCA) [2026] UKUT 00351 (TCC) that the FCA was entitled to fine an individual (RCO), and to prohibit him from conducting regulated activities under the Financial Services and Markets Act 2000 (FSMA), in circumstances where he was both an employee and owner of a fund management business (OAM).

Some might say that the facts of Odey are unusual. However, there is value for financial services firms looking to implement systems and controls for dealing with the FCA’s new rules and guidance as to non-financial misconduct (NFM) which came into force on 1 September 2026. 

In short, Odey held that RCO lacked integrity as a result of his conduct in responding to steps taken by the FCA and OAM respectively in investigating and addressing allegations and evidence of NFM (NFM Issues).

There are multiple aspects of regulatory practice addressed in Odey. This article focuses on factors which firms can face when dealing with NFM Issues in relation to ‘Key Persons’ (e.g. someone material in delivering value to a firm, or a key decision-maker in relation to other employees’ remuneration and prospects for advancement):

• How do NFM Issues relate to a firm’s obligation to establish whether a Key Person is ‘fit and proper’ (F&P) and in particular has (and does not prejudice the firm’s own) ‘integrity’ (see e.g. FIT 2.1.1 and PRIN 1)?
• How might a Key Person facing NFM Issues attempt to influence a firm’s assessment of F&P / integrity?
• How should a firm deal with such attempts? 

NFM and integrity 

On the meaning of ‘integrity’, Odey cited Thomas Seiler & Others v FCA [2023] UKUT 133 (TCC).  In the context of NFM, the absence of dishonesty as a factor does not mean integrity is unaffected:

“Even … [if] not … dishonest, if [someone] either lack[s] an ethical compass, or … [it] points them in the wrong direction, that person will lack integrity."

“… another example [is] … [where someone] acts recklessly with respect to a result … [being] aware of a risk that it will occur and it is unreasonable to take that risk having regard to the [known or perceivable] circumstances ...”

“To turn a blind eye to the obvious [or a risk] and to fail to follow up obviously suspicious signs is [also] a lack of integrity …”

The blind eye point is especially pertinent for firms’ management of NFM.

Given the above, a lack of integrity can arise in the event of:

• a single NFM Issue (e.g. in Odey, “bullying … [an employee] to try and get her to wear better clothes”); and even more so from;
• multiple NFM Issues (in Odey, an investigation in 2021 found “46 allegations or alleged incidents” over more than 15 years – 33 of which were made by two female receptionists, in relation RCO’s treatment of them or other female employees).

Firms should not place undue weight on the existence, absence or resolution of criminal proceedings. RCO had been charged with indecent assault in May 2020 and acquitted in March 2021. OAM subsequently certified RCO as F&P.  However, during 2020, RCO had become the subject of FCA supervisory scrutiny of OAM, and also of OAM’s internal HR processes, which resulted in a disciplinary hearing in February 2021 (the 1st DH) and resultant written warning.  

There is a different burden of proof between criminal (in short, beyond reasonable doubt) and other proceedings (in short, balance of probabilities).  In the context of a firm’s approach to HR proceedings the tribunal noted the Supreme Court’s rejection of the proposition that “the more serious the allegation the more cogent the evidence needed to prove it” (In Re B [2009] 1 AC 11).  RCO’s acquittal did not deter the FCA from commencing an enforcement investigation into both RCO and OAM in May 2021.

As well as the appropriate treatment of evidence in their internal proceedings on NFM Issues, firms will also need to deal appropriately with the practical reality of the dynamic with a Key Person outside such procedures. Odey contains a number of statements which might readily be echoed in exchanges between firms and their own Key Persons.

Key person challenges

The overarching finding was that RCO “had difficulties in seeing any difference between his own personal interests and the interests of the firm.”  A firm which identified that a Key Person might have such a view, or was only willing or able to behave from self-interest, would need to consider whether that Key Person had an adequate ‘moral compass’.  In RCO’s case, the Tribunal found he lacked integrity in this regard, and rejected his assertion that “Self-interest is the heart of good governance.”

The tribunal also rejected RCO’s position that there wasn’t a “power dynamic at play in his dealings with receptionists because of his status in the firm”, describing himself as “really an employee”. The tribunal noted RCO’s inconsistency when he also said to OAM “... [OAM] has got my name on the door...I put all the capital that’s in this business. It’s my retained profits....”  

A further phrase from RCO which some firms might have heard from other Key Persons was “may be I’m just a dinosaur but I really can’t see how” his conduct “can be sexual harassment”.

Another witness recounted discussions about OAM “need[ing] to consider the scenario of [RCO’s] dismissal …” to which RCO said “… if you do that, I’ll sue you for unfair dismissal”, or “I’m just going to shut down the business.”

The essential point for firms is that, in tackling NFM, they must have appropriate systems and controls, to which they must adhere.  This is the best mitigant of the risks of regulatory and employment law action, which need to be considered in tandem. RCO had argued that OAM could not pursue its own disciplinary proceedings once the FCA had become engaged; the Tribunal held, “it cannot be right that as soon as an area of decision-making inside a firm is under scrutiny by the regulator, the firm’s governing body is … able to abandon all responsibility for that area of governance in the meantime.”

Internal governance and exogenous perception

Odey also gives a useful insight into the FCA’s view of NFM Issues involving a Key Person.  On learning that RCO had not been dismissed after the 1st DH, the FCA had concerns that RCO’s behaviour “would have been tolerated had it been a different member of staff … [and was] likely to have … set the wrong culture”. Such concerns naturally lead to regulatory challenges. 

The solution for such challenges is effective, ‘seniority-neutral’ anti-NFM procedures (e.g. internal reporting, including complaints and whistleblowing).  One OAM executive committee (ExCo) witness said: “One of the worrying things for me … was that I had never seen evidence of shoulder massages, or the other things that the [disciplinary] process revealed… [may have] become normalised … if we as ExCo were not seeing it, we couldn’t police it.”  

Firms with such procedures, and a culture in which their use is encouraged, will have management bodies that ‘see’ the true state of employees’ conduct - and therefore the firm’s culture - as to NFM.

Browne Jacobson’s financial regulation team is available to support and advise on matters of both non-financial and financial conduct. Get in touch today.