We kick off 2026 with reflections on the themes we saw in the financial services sector in the second half of 2025.
Risk management and preventing sexual harassment
Large financial services firms are increasingly setting the benchmark on assessing the risk of sexual harassment, although many organisations are still adjusting to this becoming a business-as-usual activity for HR. We continue to see some tension between the traditionally confidential handling of sexual harassment complaints and the broader, more preventative framing encouraged by the statutory duty.
Requests for in-person, scenario-based training are high. Employers recognise that such sessions often provide the clearest way to demonstrate the “reasonable steps” required by the duty and many are booking in this training for 2026 as part of their pre-end-of-year social events risk planning.
Non-financial misconduct and sexism in the City
On 12 December 2025, the FCA issued its final guidance on non-financial misconduct (NFM). Implementation of new rules for non-bank firms will take effect from 1 September 2026. Our earlier update is here and the final guidance can be read here.
A year on from the Treasury Select Committee’s Sexism in the City report, the FCA reported 76 open supervisory cases involving NFM across wholesale and retail sectors, with one case concluded to date and the remainder continuing through the supervisory process. We discuss the update given by the FCA in more detail here.
Many firms have informally earmarked early 2026 for a review of their internal controls to ensure alignment with the final FCA guidance. There is also some comfort that the FCA is not planning further sector-wide culture surveys at this stage.
Neurodiversity and inclusive practice
We are observing increased awareness of neurodiversity, with more sophisticated responses emerging in practice. Firms are partnering with specialist providers to offer assessments and psychological support, and HR teams are becoming more attuned to the adjustments needed across the employee lifecycle.
This is also influencing how organisations think about workplace events. Just as risk assessments for festive gatherings and other work social events are now shaped by the statutory duty to prevent sexual harassment, firms are beginning to factor in wider inclusivity considerations – including the needs of neurodiverse employees and those with disabilities – to ensure events are accessible, safe and genuinely inclusive.
Wellbeing and psychological risk
A key emphasis at this year’s Mad World Summit was the growing evidence supporting the effectiveness of people leader training on wellbeing. The Summit’s legal track included significant discussion of LawCare’s Life in the Law 2025 report and how firms can use data to monitor progress.
Engagement survey results remain an important source of employee sentiment and we expect further evolution in the language organisations use when discussing wellbeing, with clearer references to psychological risk and prevention.
The FCA’s Prescribed Persons Annual Report 2024/25 showed a sustained increase in whistleblowing activity, with 1,131 reports received between April 2024 and March 2025. The FCA continues to observe international approaches to whistleblowing incentives but has not signalled any intention to adopt similar measures. We have also seen an increase in matters on which we are working alongside our FS regulatory colleagues to investigate sensitive whistleblowing reports.
Separately, legislative changes effective from 1 October 2025 confirm that individuals retain statutory rights to report suspected criminal conduct even where they have previously signed an NDA. In-house teams have been updating their templates in response.
Motor finance consumer redress
Following the Supreme Court’s decision in August 2025 on historic motor finance commission arrangements, the FCA’s consultation on the consumer redress scheme (CP25/27) closed on 12 December 2025, with final rules expected in early 2026.
As with PPI, firms may face significant operational demands, pressure on complaints-handling teams, and the need for strong SMF oversight and well-evidenced decision-making.
HR and in-house teams are playing an increasing role in ensuring fraud prevention is embedded in organisational culture rather than viewed solely as a compliance requirement. Many firms have refreshed training and communications to reinforce that fraud prevention is a shared responsibility, and legal teams are updating template agreements and appointment letters.
Our Failure to Prevent Fraud Toolkit provides checklists and templates to help firms benchmark compliance and implement appropriate procedures.
Employment Tribunal claims and budget planning
We are seeing continued growth in Employment Tribunal activity, with many employers already factoring further increases into their 2026 budgets as a result of the Employment Rights Bill. Against this backdrop, organisations are increasingly exploring fixed-fee or portfolio-based litigation models to achieve cost certainty and a more predictable claims strategy.
Dentons’ Helix Employment Tribunal service supports clients in managing and delivering these cases with structured processes, clear governance and data-led insight. We are already using AI in innovative and practical ways, always subject to client comfort levels and deployed under strict safeguards. This includes AI-supported triage, document generation and early settlement modelling – all reviewed by our lawyers to ensure accuracy, consistency and control.
Across sectors, including financial services, employers are also asking us to help them design responsible, AI-enabled solutions that enhance decision-making, streamline workflows and identify emerging trends in claim patterns. This combination of human expertise and carefully governed innovation helps organisations plan budgets more effectively and respond confidently to a rapidly evolving ET landscape.
Towards the end of 2025, we have seen a general spike in restructuring activity across several sectors. We anticipate this trend may become more visible in the financial services sector in 2026.
Maternity pay and family leave
Some firms are re-evaluating clawback provisions for enhanced family leave pay. While recent years saw increasing generosity, there is renewed focus on ensuring clawback terms are clearly drafted and enforceable, balancing business needs, retention concerns and reputational considerations.
Expectations on office presence continue to shift. Those that have not previously taken a firm stance on return-to-office mandates are revisiting the position, often in the context of real estate investment as well as collaboration needs, performance management and cultural expectations.
GCs in the spotlight and boundaries in senior relationships
Questions around how organisations manage personal relationships at work have resurfaced in the second half of this year, particularly in relation to expectations of disclosure and transparency.
In smaller FS firms, we are seeing GCs drawn into sensitive matters involving individuals to whom they may report, creating natural tensions around independence, confidentiality and escalation routes. Some are reviewing whether their frameworks provide sufficient clarity on conflicts management and support for GCs navigating concerns involving SMF holders.
Fitness and propriety assessments and regulatory references
Finally, although the fitness and propriety (F&P) framework has been in place for many years, we are seeing a slight shift in approach. More clients are seeking advice on out-of-cycle assessments.
Similarly, firms are stress-testing their approach to regulatory references, to ensure their approach stands up to scrutiny and is consistent with current expectations.
