We want to see more diversity across regulated firms and listed companies. Read about the work we’re doing towards this goal and why inclusion is so important in financial services.
We know that diversity and inclusion underpin healthy cultures in firms. For that reason, they’re important features of how we evaluate firm culture and conduct.
We want to see the benefits of diversity and inclusion result in less harm for consumers, and better functioning markets. People with different life experiences bring new thinking, and their experiences inspire new approaches to problem solving and decision making.
Diversity and inclusion can also encourage innovation, through the development of products and services designed to meet the diverse needs of customers.
An inclusive approach to regulation
Diversity of thought, when supported by a safe and inclusive approach to diverse views, enables employees to contribute fully.
By inclusive approach, we mean an environment where different views are listened to and valued, increasing understanding of the diverse needs of consumers across society.
It’s also essential that all staff feel safe for them to be truly included, that’s why psychological safety is fundamental for inclusion.
As part of our Public Sector Equality Duty we look for ways to eliminate discrimination, to advance equality of opportunity and to foster good relations between people who share a protected characteristic and those who don’t - both within the FCA and in how we regulate firms.
Our commitment is not just a legal one. We recognise the clear links between increased diversity and inclusion in firms, healthy cultures and better outcomes for consumers and markets; clearly aligning to our statutory objectives and purpose.
Working to accelerate change
Within the financial services sector, although there has been increasing recognition of a need for more diverse boards and executive leaders, progress has been limited. We recognise that regulators and industry need to work together to increase diversity and inclusion to accelerate change.
In July 2021, we published a Discussion Paper, jointly with the Prudential Regulation Authority (PRA) and the Bank of England, on diversity and inclusion in the financial sector, to set out our thoughts on how we can work with all stakeholders to drive change.
Alongside the Discussion Paper we published a literature review on the impact of diversity and inclusion on achieving better outcomes. This pulls together numerous sources of research and data to show why progress in this area, and on the quality of the data we collect, is so important.
The Discussion Paper opened a formal discussion with industry and other stakeholders on how we should use our powers to further diversity and inclusion within firms. It clarified why we as regulators care about diversity and inclusion, the importance of data, and options for driving change through policy.
Using data to monitor progress
Data is a significant part of this work. We want firms to get better at collecting and using data to monitor their progress on diversity and inclusion. We also want to understand the levels of diversity currently within firms to inform our future policy development.
We issued a pilot data survey to a broad range of firms, jointly with the PRA and the Bank of England, to help inform our understanding of the diversity and inclusion data that is currently collected and how it is used.
The Discussion Paper has now closed, and the pilot survey closes on 15 November. We will use the feedback and data we receive to develop more detailed proposals, which we expect to consult on in Q2 2022.
We also published a Consultation Paper, setting out proposals to change our Listing Rules to require companies to disclose annually, on a comply or explain basis, whether they meet specific board diversity targets. Companies would also be required to publish diversity data on their boards and executive management.
Our other work
There are important intersections across our regulatory work, including:
- our work on culture and governance
- our guidance for firms on the fair treatment for vulnerable customers
- our proposals on a new Consumer Duty
Diversity and inclusion will continue to be a focus for us in relation to pursuing good consumer outcomes through our policy development and supervisory approach.