Diversity and inclusion: Our role as a regulator

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 must 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.

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.

We’re aiming to publish a Consultation Paper on this topic in Summer 2022, and will then publish a Policy Statement, which will set out any new rules, requirements and guidance. 

We have published our final policy position (PS22/3) on promoting transparency on the diversity of listed companies’ board and executive management. Alongside this, we are requiring companies to disclose the breakdown of diversity by sex or gender and ethnicity for their boards and executive management level. 

Alongside this, we require companies to disclose the breakdown of diversity by sex or gender and ethnicity for their boards and executive management. Companies not meeting the targets will need to explain why they are not. 

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 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.

Our other work 

There are important intersections across our regulatory work, including:

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. 

Page updates

19/07/2022: Information changed Updated in line with Diversity Annual Report 2021/22
20/04/2022: Information added PS22/3: Diversity and inclusion on company boards and executive management
27/10/2021: Editorial amendment General page updates.