Financial services regulators put focus on diversity and inclusion

Regulators in financial services are seeking views from the market on how to improve diversity and inclusion, including targets for representation and increased accountability for senior leaders. The proposals from the Financial Conduct Authority, the Prudential Regulation Authority and the Bank of England are outlined in discussion paper DP21/2.

In addition, the regulators have suggested linking remuneration to diversity and inclusion metrics, and ways to enable stakeholders to better monitor diversity and inclusion progress.

Sam Woods, deputy governor for prudential regulation and chief executive of the PRA, said: “While some progress has been made to improve diversity and inclusion in parts of the financial services sector over the last decade, the discussion is still in its early stages, and more needs to be done to speed up progress.

“Regulators and industry need to work together to increase diversity at senior levels and ensure that the UK’s financial services firms are best equipped to serve the economy. A lack of diversity of thought can lead to a lack of challenge to accepted views and ways of working, which risks compromising firms’ safety and soundness.”

Nikhil Rathi, chief executive of the FCA added: “We are concerned that lack of diversity and inclusion within firms can weaken the quality of decision-making. We look forward to an open discussion on how we should use our powers to further diversity and inclusion within financial services, to the mutual benefit of firms and their customers.”

The discussion paper is open until 30 September 2021 and will inform a joint consultation planned for Q1 2022.

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