The FCA and the PRA have proposed new regulations to promote the “safety and soundness” of firms across financial services.
Companies will be encouraged to create and implement a diversity and inclusion strategy, collect and disclose data against certain characteristics, and set targets to address underrepresentation.
The FCA will also help firms to regulate non-financial matters, such as bullying or sexual harassment in the workplace.
“This guidance will help ensure firms can take decisive and appropriate action against employees for such behaviour,” said a press release.
Nikhil Rathi, chief executive at the FCA, said: “For UK financial services to be competitive and for the companies in it to be well run with healthy work environments, its vital they attract, retain and promote the best talent.”
“The data suggests this isn’t happening,” said Rathi.
The regulators will look in particular at larger firms, encouraging them to report on their diversity and inclusion initiatives now, with the aim of enforcing concrete rules in 2024.
The proposed rules aim to see increased diversity and inclusion translate into better internal governance, decision making, and risk management.
The consultation papers have been released ahead of the FCA’s final rules, which are due to be published in 2024.
The regulators are welcoming comments on the proposals until 18 December 2023.