Financial regulators want to accelerate the pace of “meaningful change” on diversity and inclusion in the sector.
While the financial sector has taken “steps forward” in recent years there is still “much more” that needs to be done.
The Financial Conduct Authority, Prudential Regulation Authority (PRA) and the Bank of England are seeking views of plans from the regulators to improve diversity and inclusion in financial services.
A joint discussion paper, proposes measures such as making senior leaders directly accountable for diversity and inclusion in their firms.
It has suggestions including targets for representation and linking remuneration to diversity and inclusion metrics.
The paper also outlines the regulators’ approach to considering diversity and inclusion in non-financial misconduct.
Data and disclosure will be important to help firms, regulators and other stakeholders to monitor progress.
The regulators believe that increased diversity and inclusion will advance their statutory objectives. They say it will result in “improved governance, decision-making and risk management within firms, a more innovative industry, and products and services better suited to the diverse needs of consumers.”
FCA chief executive Nikhil Rathi said: “We are concerned that lack of diversity and inclusion within firms can weaken the quality of decision-making. We look forward to an open discussion on how we should use our powers to further diversity and inclusion within financial services, to the mutual benefit of firms and their customers.”
Sam Woods, deputy governor for prudential regulation and chief executive of PRA added: “While some progress has been made to improve diversity and inclusion in parts of the financial services sector over the past decade, the discussion is still in its early stages, and more needs to be done to speed up progress.
“Regulators and industry need to work together to increase diversity at senior levels and ensure that the UK’s financial services firms are best equipped to serve the economy. A lack of diversity of thought can lead to a lack of challenge to accepted views and ways of working, which risks compromising firms’ safety and soundness.
“The paper we have published today is intended to start a new conversation with firms about how we can best move forward across the sector, while we also take steps to improve diversity and inclusion within our own organisations. I encourage firms and other interested stakeholders to give us their views on our proposals.”
The regulators propose collecting data from firms about their workforce. There will be a pilot survey later this year.
The discussion paper is open until 30 September 2021. The feedback and data received will be used to develop “detailed proposals”, with a joint consultation planned for Q1 2022.
