The UK’s top financial watchdog, the Financial Conduct Authority (FCA), has announced the decision to step up the scrutiny of non-financial misconduct across the country’s finance sector, as reported by Reuters on January 17. The regulator will launch a new investigation into sexual harassment and bullying within the wholesale banking and insurance market. Specifically, the surveyed companies, including wholesale banks, wholesale insurers, and brokers, will be asked to provide data on the number of complaints associated with non-financial misconduct in their businesses, together with the methods they adopt to detect and resolve these misbehaviors.

The FCA’s intensified scrutiny of non-financial misconduct follows several high-profile sexual misconduct stances, including that of hedge fund founder Crispin Odey, who was ejected from his company after an investigation by the Financial Times revealed multiple claims of sexual harassment and assault against him. In addition, the regulator’s move is influenced by 40 women from 30 financial services companies, who shared their personal experiences of sexism and misogyny anonymously with the Parliament’s Treasury Committee. The committee’s recent report highlighted the challenges faced by the victims in reporting misconduct, often leading them to switch teams, exit the company, or even leave the industry. The victims also emphasized the widespread use of non-disclosure agreements (NDAs) in sexual harassment cases as a means to protect firms’ reputation. Their recommendations include implementing credible threats of fines and penalties for those condoning or perpetuating sexual misconduct, requiring firms to report the number of NDAs in such cases, and encompassing such non-financial conduct in the “fit and proper” standards for finance professionals.

Sources:

https://www.reuters.com/business/finance/uk-regulator-survey-wholesale-banks-insurers-sexism-bullying-2024-01-17/

https://www.ft.com/content/51a1e0d0-de3c-48ed-8053-501bab56e480