’Our proposals will encourage the largest firms to put in place plans and report against their delivery,’ says chief executive
The FCA and Prudential Regulation Authority (PRA) have set out new proposals to boost diversity and inclusion across the financial services industry.
In a consultation released yesterday (25 September 2023), the regulators that most of its proposals would only apply to the largest firms and “raise the bar” for them.
This is because the proposals would place more requirements on bigger businesses to collect, report and disclose data against certain characteristics and set targets to address under-representation.
They will also be required to develop a diversity and inclusion strategy that sets out how objectives and goals will be met.
”For UK financial services to be competitive and for the companies in it to be well run with healthy work environments, it’s vital they attract, retain and promote the best talent,” FCA chief executive Nikhil Rathi said.
“Our proposals will encourage the largest firms to put in place plans and report against their delivery.”
PRA chief executive Sam Woods added that a stronger diversity and inclusiveness “should also make firms more competitive by enabling them to attract a wider pool of talent”.
“We are tabling proposals that we think will advance our objectives, alongside existing core parts of our regime, such as capital and liquidity requirements, and we welcome views on them from all stakeholders,” he added.
Flexibility
The FCA and PRA said in its consultation paper that the proposals will be aimed at firms with 251 or more employees.
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However, it said that smaller firms who feel able to apply more elements than required should do so.
“Flexibility is at the heart of the proposals,” it added.
”Each firm is different and they need to come up with their own solutions.”
The regulators also felt that if such rules were imposed, it would translate into better internal governance, decision making and risk management across the financial service sector.
”UK financial services has long been a magnet for best-in-class talent globally. Increasing levels of diversity within firms can help attract and unlock talent, supporting the sector’s international competitiveness,” Rathi added.
”We have taken a lead among regulators in taking a clear stance that non-financial misconduct, such as sexual harassment, is misconduct for regulatory purposes.
“We’re strengthening our expectations on how the firms we regulate consider such misconduct when deciding whether someone is fit and proper to work within the industry.”
Data
Meanwhile, Sophie White, partner in employment at Eversheds Sutherland, said data collection will be essential in order for larger firms to comply with the reporting proposals.
“The manner and success of its collection across companies to provide comparisons and create a benchmark will be vital,” she added.
“The strength of the structures used for data collection and the use of it to create a sustainable pipeline of diverse talent that reaches the top of an organisation will be key.
“But, meeting this ambition will be made difficult if engagement with employees around the importance of data collection, and how the data will be used, is not done correctly.”
The consultation is open until 18 December 2023.
His career began in 2019, when he joined a local north London newspaper after graduating from the University of Sheffield with a first-class honours degree in journalism.
Now working within the insurance sector, James has a particular focus on motor, M&A activity and financial reporting.View full Profile
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