The FCA will not move forward with its work to improve diversity and inclusion in financial services firms.
In 2023, the FCA and PRA consulted in parallel on proposed rules and expectations aimed at improving diversity and inclusion in regulated firms.
The measures aimed to support healthy work cultures, reduce groupthink and unlock talent, as well as enhance the safety and soundness of firms and improve understanding of diverse consumer needs.
The proposals included new rules and guidance to make clear that misconduct such as bullying and sexual harassment poses a risk to healthy firm culture, ensuring firms can take decisive and appropriate action against employees for such behaviour.
However, today the FCA said that "in light of the broad range of feedback received, expected legislative developments and to avoid additional burdens on firms at this time, the FCA and PRA have no plans to take the work further".
The FCA is also delaying its work on non-financial misconduct. The regulator says "it is important that our approach is proportionate and aligned with planned legislation, so we are taking some further time to get this right and will set out next steps by the end of June this year."
Imogen Makin, counsel at WilmerHale, commented: “With the diversity and inclusion consultation, the FCA’s acknowledgement of the burden on firms from its existing rules is welcome, but diversity and inclusion is not a topic that should be forgotten by regulated firms. As the ‘Sexism in the City’ report by the Treasury Select Committee demonstrated last year, non-financial misconduct in the financial services sector remains an issue that needs to be addressed.”
“The FCA have indicated that it remains committed to tackling such behaviour, as it will help to improve outcomes for markets and consumers while reducing harm. The proposed rules on the subject have raised questions about where lines would be drawn between conduct inside and outside of work. We look forward to seeing the FCA’s proposed ‘proportionate’ next steps by the end of June.”
Hannah Gurga, director general of the Association of British Insurers (ABI), said: "Advancing and promoting diversity, equity and inclusion, and improving representation in the workplace is vital to an effective insurance and long-term savings industry. While we had supported the FCA's proposals, we will continue to champion DEI across our industry through our Blueprint, Allyship Awareness training, and collaboration with members and stakeholders. We await the regulator’s update on its non-financial misconduct work later this year.”
