British financial regulators have unveiled a comprehensive set of proposals aimed at combating sexual harassment and bullying within financial firms while concurrently promoting diversity and inclusion.
The Financial Conduct Authority (FCA) and the Bank of England’s Prudential Regulation Authority (PRA) jointly introduced these measures, emphasizing their potential to cultivate healthier work environments, break down groupthink, and tap into a broader pool of talent.
Bank of England Deputy Governor Sam Woods asserted that the proposals establish adaptable and proportionate minimum standards, with a focus on increasing requirements for larger organizations.
Companies would be mandated to formulate a robust diversity and inclusion strategy outlining their objectives and plans.
Additionally, they would be required to collect, report, and disclose data on various staff characteristics, such as disability and ethnicity.
There is also the option to voluntarily report data related to socio-economic background and gender identity.
The regulators emphasize that each firm should independently determine “appropriate diversity targets,” particularly concerning gender and ethnicity if there is a noticeable underrepresentation.
The progress towards these targets would be regularly measured. Importantly, there will be no overarching sector-wide diversity targets, allowing flexibility for individual organizations.
This initiative gains significance against the backdrop of increased scrutiny of workplace culture within financial institutions, fueled by allegations of sexual misconduct involving prominent figures like hedge fund manager Crispin Odey.
The proposals include explicit rules and guidance that underscore how misconduct, including bullying and sexual harassment, undermines a healthy work culture and necessitates appropriate corrective actions.
The regulators are also advocating for a more comprehensive evaluation of employees’ “fit and proper” status in relation to non-financial misconduct.
This signifies a paradigm shift in assessing whether an employee is suitable to continue working in the financial services sector, with ongoing investigations into individuals like Crispin Odey by the FCA to determine their “fit and proper” status.
FCA Chief Executive Nikhil Rathi highlighted the strengthening of expectations surrounding misconduct evaluation within regulated firms.
These measures, if implemented, are anticipated to herald a significant transformation in the financial industry’s workplace culture, fostering inclusivity, accountability, and ethical conduct while eradicating harassment and bullying.