Sexual Harassment and SM&CR – the FCA has its say

What constitutes sexual harassment in the workplace?

This was the question posed by a recent BBC Three documentary, ‘Is This Sexual Harassment?’. The programme was effectively a social experiment in which a group of young people (aged between 18 and 30 years) were shown a drama about the work relationship of a pair of colleagues – a drama which resulted in an accusation of sexual harassment and an employment tribunal. The scenario was split into three sections with participants invited to discuss the behaviour they’ve just witnessed.

‘Is it appropriate?’ ‘Has a line been crossed?’ As you can imagine, their opinions were varied and debate was sparked. No doubt viewers will have found themselves having similar thoughts and discussions.

Sexual harassment is an area that has been in sharp focus since the #MeToo campaign – and yet what is clear from this documentary is that there is still a worrying lack of awareness around the behaviour that is acceptable in the workplace.  Interestingly, this group of under 30s felt confused about the difference between what they perceived as acceptable in a nightclub and what is acceptable in the workplace.  It would be enlightening to run the experiment with a group of over 40s as they will probably express a different opinion on what is sexual harassment – and, I would suggest, probably not a more enlightened one.

The debates generated by the documentary made for very interesting television, albeit with a slightly depressing conclusion: many people do not understand what sexual harassment in the workplace actually is. It was clear that while many of the women taking part weren’t comfortable with the scenarios shown, they didn’t realise that the law is behind them: they have simply been brought up to believe that they are powerless to do anything about it and must simply ‘put up or shut up’.

So what does the law say?

According to the Equality Act 2010, sexual harassment is ‘unwanted conduct of a sexual nature’ which has ‘the purpose or effect of violating the dignity of a worker, or creating an intimidating hostile, degrading, humiliating or offensive environment for them.’

This definition covers a wide range of behaviours, including, for example, jokes or comments of a sexual nature, sharing pornographic material, wolf-whistles or asking questions about a person’s sexual orientation or history. The effect the behaviour has on the individual, and the fact that it is unwanted, is the issue. This means that even an offhand comment, from one colleague to another, could be overheard by a third colleague who finds it offensive. Although those directly involved in the conversation may consider it acceptable, it constitutes sexual harassment as it has created an ‘intimidating, hostile, degrading, humiliating or offensive environment.’

The Women and Equalities Committee Report on Sexual Harassment in the Workplace, published in 2018, states that sexual harassment is very common in the workplace. It is an issue, according to the report that is ‘long-standing and endemic’, and one that both employers and the regulator have clearly failed to deal with.

In December 2019, however, the Senior Managers and Certification Regime (SM&CR) comes into effect, with the aim of improving conduct at all levels. This will include tackling the issue of sexual harassment in the financial services sector. Under SM&CR, instances of sexual harassment or misconduct may be considered when evaluating whether someone is ‘fit and proper’ for a role. Perpetration of, or failure to address, sexual harassment in the workplace may be recognised as grounds for failing a test for fitness and propriety or having professional credentials removed.

SM&CR requires firms to notify the FCA of breaches of its Conduct Rules. This may include sexual harassment and other forms of non-financial misconduct. Firms are expected to have in place appropriate internal whistleblowing and complaints processes. Alternatively, individuals can use the FCA’s whistleblowing procedures to raise concerns about how sexual harassment is dealt with by firms. The FCA will consider all whistleblowing information and is interested in cases where firms systematically mishandle sexual harassment allegations or incubate a culture where sexual harassment is permitted or encouraged.

Even where a non-disclosure agreement – commonly known as a ‘gagging order’ - is in place, this does not affect the right of an individual to ‘blow the whistle’ to the regulator (SYSC 18.5).

Sexual harassment is very much in the spotlight and, if the responses to ‘Is This Sexual Harassment?’ is any indicator, it needs to be. A lack of understanding around sexual harassment is problematic, especially considering that combatting sexual harassment is increasingly being recognised as having as much importance as other corporate responsibilities such as protecting personal data and preventing money-laundering.

Where sexual harassment is prevalent in the workplace, it can be traced back to a culture that enables such behaviour and allows it to remain unchallenged. We would advise employers therefore to look at their own processes and make it clear the sort of behaviour that is acceptable in the workplace. As BBC Three’s social experiment showed, sexual harassment is not as straightforward an issue as some might believe.

About the author

Kate is the chairman and co-founder of RWA and has worked for the company for nearly 20 years. She is a fan of developing practical, workable, business-led policies and procedures. Kate has specialist training experience within the financial services sector, including major general insurers, and the Lloyd’s underwriting and broking market. She has researched and developed numerous training programmes, both for commercial and in-house use. She has extensive experience of developing in-house and public training programmes for business skills, including Diversity, Employment Law, Management and Leadership, Motivation, Coaching and Feedback, Communication Skills and EQ.

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