UK regulators abandon DEI reporting push

The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) will no longer introduce new diversity and inclusion rules for financial services organisations, claiming they wish to "avoid additional burdens on firms at this time."

The FCA and PRA - which is the regulatory arm of the Bank of England - launched a consultation in 2023 aimed at boosting diversity in financial services.

It followed a spate of sexual harassment cases and the renewal of a government committee to investigate sexism in the industry and the barriers faced by women. The resulting report, Sexism in the City, was damning and called for a raft of reforms.

The regulators consulted on imposing diversity targets and requiring large, regulated firms to report on employees' gender, ethnicity, religion and sexual orientation.

However, the FCA and PRA have now confirmed they will not pursue such changes.

"In light of the broad range of feedback received, expected legislative developments and to avoid additional burdens on firms at this time, the FCA and PRA have no plans to take the work further," they said.

FCA chief executive Nikhil Rathi said that while respondents to the consultation agreed regulators have a role to play in increasing diversity and inclusion, they wanted to avoid duplication with already planned reform agendas, including in relation to gender action plans, and disability and ethnicity pay gap reporting.

Rathi added that the regulators continue to support voluntary industry initiatives on this front.

Meantime, PRA chief executive Sam Wood said: "We continue to think that an appropriate focus on diversity and inclusion in the culture of the firms we regulate can deliver improved internal governance, decision-making and risk management, and that this can support both safety and soundness - through reduced risk of group-think - and the competitiveness of UK financial services over the medium- to long-term."

"There is also a growing emphasis in our work on reducing regulatory burdens on firms while still delivering our objectives and adding significant new requirements in this area could be seen as in tension with that approach. Given this, we do not currently plan to publish new rules on diversity and inclusion, and do not intend to return to this question until after the substantive implementation of any new legislation in this area."

He added that the PRA will remain "alert to the risks of groupthink within firms."