On 25 September 2023, the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) published consultation papers seeking to boost Diversity and Inclusion (D&I), and re-emphasising the regulators' stance that non-financial misconduct, including bullying and sexual harassment, is misconduct for regulatory purposes.
There are several proposals within both the FCA consultation paper and the PRA consultation paper, which will be of interest to HR, ER, Reward and in house employment counsels, and are highlighted in our Financial Services Reward teams’ latest blog.
The FCA and PRA say the D&I proposals set ‘flexible, proportionate minimum standards to raise the bar’, placing more requirements on larger firms. Proposals include requirements to:
- develop a D&I strategy setting out how the firm will meet their objectives and goals;
- collect, report and disclose diversity data against certain characteristics; and
- set targets to address under-representation.
As many organisations are already aware, collecting employee diversity data can be challenging, being dependent on employees’ willingness to disclose and share confidential data.
The proposed provisions around non-financial misconduct, including amendments to the rules regarding fitness and propriety (FIT) and also the Conduct Rules (COCON) will also mean that employers will need to consider their approach to allegations of employee misconduct (both inside and outside of work) and their internal policies and procedures for dealing with it.
Both consultations close on 18 December 2023. The regulators will review feedback and publish policy statements in 2024, with a view to bringing the rules into force 12 months after publication of the policy statements.
For further details on the consultation papers, you can subscribe to our blog posts here. Otherwise, if you have any questions about the proposals and the implications for your organisation, please contact your usual member of our team or Marian Bloodworth, Financial Services Employment Law Partner, Deloitte Legal.