Earlier this year, the UK Financial Conduct Authority noted a significant uptick in reported sexual harassment allegations. This increase prompted Parliament's Treasury Committee to launch an inquiry into "Sexism in the City." Throughout that inquiry, witnesses have called on the FCA to take a more active role in preventing non-financial misconduct.
Baroness Helena Morrissey, chair of the Diversity Project, testified in the first hearing and raised concerns about the FCA's recent consultation paper, "Diversity and Inclusion in the Financial Sector." The paper proposed incorporating non-financial misconduct into fitness and propriety assessments and conduct rules, but stipulated that only "serious misconduct" would qualify as a violation. Morrissey worried about the lack of clear definition and scope for "serious misconduct," urging the FCA to strengthen disciplinary sanctions to deter misconduct effectively, emphasizing potential "career-ending" consequences.
Witness testimonies also identified key issues impeding change, including a 'fear factor' preventing victims and witnesses from reporting due to disbelief and career repercussions. Mark Freed, CEO of the Diversity Project, called out the silence from men working in the industry, stating that they also must speak up when they suspect misconduct to ensure that this burden is not solely placed on victims. The fear-induced silence impedes both investigative and disciplinary procedures, often resulting in victims leaving firms instead of perpetrators being removed. Morrissey suggested that independent investigations might be necessary to eradicate such fear and restore confidence in reporting mechanisms.
Looking ahead, the FCA is seeking feedback on the consultation paper until mid-December, with plans to develop a policy statement outlining regulatory requirements in the New Year.