A joint discussion paper has been issued by the UK’s Prudential Regulation Authority (PRA), the Bank of England and the Financial Conduct Authority seeking ways to “accelerate the pace of meaningful change on diversity and inclusion in the sector”.
The paper acknowledges that large gender and ethnicity pay gaps still exist in the financial sector, and that there are parts of the industry which lack diversity at senior levels, while products offered to customers still do not always meet the needs of disadvantaged groups.
In addition, it suggests, staff at both firms and regulators do not often have the vocabulary or skills to conduct open and constructive conversations about sensitive subjects such as race:
“There is clear momentum for change, which is building around the world. Social movements and increasing investor focus have led to global conversations, in particular about gender and race. These have engaged the attention of regulators globally.”
Unveiling the paper, the FCA said that it recognises that the financial sector has taken steps forward on diversity and inclusion, but said “there is much more that needs to be done to create truly diverse and inclusive organisations that meet the diverse needs of those we serve”.
In a statement the FCA added: “Diversity and inclusion are critical to our work on culture and governance, particularly for boards and senior management. For the FCA, it will also be based in existing work on the treatment of consumers, including vulnerability and the proposed new consumer duty.”
“Research shows the positive benefits between diversity and inclusion and positive outcomes in risk management, good conduct, healthy working cultures, and innovation. This discussion paper follows our recent expectations set out in our Guidance for firms on the fair treatment of vulnerable customers and research from our Financial Lives 2020 survey.”
Comments on this Discussion Paper are asked by 30 September 2021.
To read the discussion paper, click here.
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