Reuters spoke with lawyers at seven mid-sized law firms with sizeable legal practices and one of the Big Four professional services firms.
Of those, lawyers at two firms said they were not aware of staff being let go because of conduct allegations ahead of the new rules. The rest either reported a small number of dismissals or confirmed that conduct was increasingly in managers' focus.
Asked for comment, the FCA did not directly address the examples of how a greater focus on misconduct could be abused, but said the new rules created more clarity.
"Our rules and guidance will help industry take a more consistent approach to tackling non-financial misconduct – however primary responsibility for preventing and dealing with it lies with firms," the watchdog said in a statement.
A spokesperson for the Alternative Investment Management Association said the body had published guidance for members.
"As firms prepare for go-live, many are reviewing their policies, training and governance arrangements, although the practical impact will depend on the frameworks they already have in place," the spokesperson said.
Culture in Britain's financial services industry has long been in the spotlight.
Lawmakers on the parliamentary Treasury Committee voiced shock at the prevalence of sexual harassment and bullying — and at how poorly such allegations were handled — in a 2024 report on sexism in London's financial centre.
An FCA study that year showed that reports of misconduct such as bullying had surged over 70% over three years to 2023, with more than one third of firms not reporting cases to their boards.
Under the new rules, conduct breaches must be disclosed to future employers under regulatory references or formal fitness-for-office assessments, designed to prevent "rolling bad apples" from avoiding consequences by moving from job to job. Instead, offenders risk a potentially career-ending regulatory investigation.
The guidance also covers social media activity.
Lawyers now worry the rules might be applied inconsistently, partly because firms are worried about ending up in regulatory crosshairs.
"Based on what I am seeing, many employers are still likely to reach knee-jerk conclusions in relatively minor cases, often opting to exit individuals rather than risk potential criticism from the regulator," said Claire Cross, a partner at law firm Corker Binning.
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