Our role as a regulator: why diversity and inclusion matter in financial services

We know that diversity and inclusion underpin healthy cultures in firms – so they’re important features of how we evaluate firm culture and conduct.

We want financial services firms to consider diversity and inclusion from two angles – as employers and in terms of how they serve their markets. 

In addition, we make sure we deliver against the Public Sector Equality Duty. This means we must look for ways to eliminate discrimination, advance equality of opportunity and foster good relations between people with a protected characteristic and those without – both within the FCA and in how we regulate. We do this through our key regulatory functions.

Within the financial services industry, although there has been increasing recognition of a need for more diverse boards and executive leaders for some time, to date, progress has been limited. It’s clear that having policies in this area is not enough: firms need to take action and monitor their effectiveness to assess if the changes they implement are bringing tangible outcomes.

We want financial services firms to have healthy cultures that reduce the potential for harm to consumers and markets. We believe there are common elements that characterise healthy cultures: they’re purposeful and they’re safe. They support environments that are diverse and inclusive.

Diversity has many dimensions. People with different life experiences can bring new thinking, and their experiences can inspire new approaches to problem solving and decision making. 

Diversity of perspectives in financial services firms, and an inclusive approach to different views, lead to better decision making, and help firms to understand and meet the needs of consumers from diverse segments of society. This, in turn, leads to a reduced risk of harm to consumers and to market integrity and encourages innovation, through the development of products and services designed to meet the needs of all types of consumer.

Safe cultures play a key role in supporting inclusion by enabling employees to bring their whole selves to work. Without safety, without an inclusive culture, the value of diversity will be lost. Firms cannot benefit from true diversity of thought without inclusion.  

Increasing our focus on diversity and inclusion

Ultimately, we want firms to take action to embed diverse and inclusive cultures, so they can realise the benefits within their organisations. We’re exploring how we can support firms to address the challenges of building a diverse and inclusive workforce, as this aligns closely with good conduct.

We also consider the accessibility of our systems and services and the impact of our policies and processes on different groups of the UK population. Our Financial Lives survey has given us extensive data on the attitudes and concerns of consumers in various groups, and the experiences of vulnerable consumers. This provides valuable insights and underpins our consumer protection work, policy development and supervisory approach.

We’re increasing our focus on our role in diversity and inclusion as a regulator over the coming year. We’ll do more to consider how we can better understand potential disadvantages and disparities faced by financial services users with different diversity characteristics and use those insights and analysis in our policy and culture work. This will be particularly important in the context of the coronavirus (Covid-19) crisis, which is affecting different groups in different ways – and our measures need to recognise and address that. 

We’ll also do more to embed diversity and inclusion in our culture, supervisory work and other regulatory approaches, and do more to actively identify where we can support positive change.