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UK FCA to Probe the Use of NDAs to Conceal Misconduct

UK FCA to Probe the Use of NDAs to Conceal Misconduct

by Starling Insights

Starling Insights Editorial Board

Feb 01, 2024


The UK Financial Conduct Authority (FCA) has unveiled plans to investigate sexual harassment and bullying complaints in the financial industry. As reported by Laura Noonan of the Financial Times, the exercise will include a particular focus on the use of non-disclosure agreements (NDAs) to conceal misconduct.

Sarah Pritchard, Executive Director for Markets and International at the FCA, revealed the regulator's intensified efforts before Parliament's Treasury Select Committee earlier this month. In a hearing relating to the Comittee's "Sexism in the City" inquiry, Pritchard explained that financial firms will be asked to provide data on the number of non-financial misconduct complaints in their businesses, and how those issues are detected and resolved.

"One of the reasons that we're going out with the piece of work . . . will be so that we can see how cases of non-financial misconduct are resolved," she said. "If we see, for example, use of NDAs alongside non-financial misconduct coming through that data . . . we will be able to take that into account in our future supervisory work." 

This investigation is a part of the FCA's broader effort to crack down on non-financial misconduct in the industry. In September 2023, the FCA and the Prudential Regulation Authority (PRA) published a proposed  Diversity & Inclusion (D&I) regulatory framework. The proposal introduced new guidance on addressing "serious instances of harassment and bullying" and incorporated non-financial misconduct into the FCA's "fit and proper" test for financial services employees. 

"Financial services workplaces need to be safe places for women," FCA CEO Nikhil Rathi said in an interview at the time. "Companies that do not have an environment where serious issues like that are dealt with and addressed are unlikely to be companies that have an environment which is healthy from a risk management perspective. We want to make sure that we are proactive around that."

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