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Diversity and Inclusion – Doing More
In a speech delivered on the 10th of October 2019, the FCA highlighted diversity and inclusion as “a mainstream business issue that speaks to a firm’s culture and conduct”. Although the speech by Executive Director of Strategy and Competition, Christopher Woolard, talks about diversity and inclusion in asset management, it is an issue that applies to financial services as a whole – as evidenced by the imminent introduction of the Senior Managers and Certification Regime (SM&CR) in December.
One of the key aims of SM&CR is improving conduct across financial services in order to prevent consumer harm, and clearly the regulator believes that diversity and inclusivity has a role to play in a firm’s culture.
Financial services consumers themselves are, of course, diverse – in terms of age, gender, social class, ethnicity, financial situation, education etc. It is an industry that impacts on a very high percentage of the population. It therefore makes sense that firms within financial services can understand and empathise with a diverse range of people. The FCA states that diversity and inclusion is “no longer an issue that can be swept under the rug” as the public will have certain expectations of firms and the service they should receive. An organisation that is inclusive and diverse will be more likely to have at its disposal a range of views and experiences, and different ideas and perspectives.
In an article published in June, ‘SM&CR and Diversity and Inclusion’, we looked at the very issues the FCA is talking about. Diversity and inclusion should be meaningful, not ‘tick box’. Diversity is something a workplace has, whereas inclusion is something it does, so being proactive is key here. Firms need to go further than simply putting in place diversity initiatives that are not fully developed or followed up, for example.
The FCA’s own target is to see 45% of its Senior Leadership Team (SLT) identify as female by 2020, rising to 50% by 2025. Its black, Asian and minority ethnic (BAME) target is 8% by 2020. It also admits that these targets may be hard to reach as improving diversity and inclusion in the sector is not something that will happen overnight. However, such targets are a push to do more, to do better and to work faster to make diversity and inclusion a reality, rather than something that is simply talked about.
It is also important to consider that under SM&CR, with emphasis placed on improving conduct at all levels, non-financial misconduct may be considered in an assessment of a person’s fitness and propriety and this may include things such as discrimination, bullying, harassment or non-adherence with equalities legislation. Firms should therefore consider diversity and inclusion issues as a priority and will be expected to take allegations of sexual misconduct, homophobia, racism, bullying or harassment seriously.
Clearly, diversity and inclusion remains a key supervisory concern for the FCA and is something firms should be considering ahead of the implementation of SM&CR on 9th December 2019.