The Financial Conduct Authority’s impending rule changes must not loosen its crackdown on harassment and bullying, senior women in the financial district of London (known as the ‘City’) have urged.
Baroness Helena Morrissey said in the City & Financial Global culture and conduct forum earlier this month that regulations have “got to have teeth” and “really clear guardrails” to discourage bad actors. It was also important for people to see “actual results will happen” when bad behaviours are flagged.
The Diversity Project chair argued that there is a tendency to treat non-financial misconduct less seriously, “but this is why you get the Libor scandal — because you’ve got poor behaviour.”
Former KPMG UK chief executive Mary O’Connor said the FCA must ensure there are “clear expectations” about how boards and senior managers respond to and prevent non-financial misconduct.
FCA chief operating officer Emily Shepperd said the regulator had been updating its rules and guidance about non-financial misconduct following a consultation and would set out more detail “very shortly”.
She said the FCA supports the government’s position that growth is the number one objective for the UK, but “culture will continue to be regulatory concern.” A landmark review by the FCA of non-financial misconduct found that 2,347 allegations of bullying, harassment and discrimination were reported in 2023 — a 40pc increase from 2022. A Treasury Committee investigation into sexism in the City and a string of allegations involving powerful individuals and institutions led the FCA to launch in September 2023 a consultation on diversity and inclusion in financial services.
More than a dozen women accused hedge fund mogul Crispin Odey of sexual assault and there were also claims of misconduct at BGC Group. Both Odey and the broker deny the allegations.
Former Legal & General Investment Management CEO Michelle Scrimgeour said it was “shocking” that “firms are still talking about this” following the introduction by the FCA of the Senior Managers and Certification Regime and the “fit and proper” test.
“Some more examples (from the FCA concerning non-financial misconduct) would be fantastic, but accountability has to lie with the firms to get it right — or to be held to account if they don’t,” she added.
It was only in 2023, I recall, when news broke out of a scandal in the offices of CBI (Confederation of British Industry) and the group admitted it failed to sack staff, who sexually harassed female staff. CBI eventually dismissed its director general, Tony Danker, following allegations about his conduct.
Danker claimed his sacking was unfair and that he was being made the “fall guy” for the crisis. An increasing number of firms had cut their association with the lobby group at the time. CBI then appointed, in April 2023, Rain Newton-Smith, as director general. She had worked with the firm as chief economist from 2014 to March 2023 when she joined Barclays.
O’Connor said harassment, bullying and other non-financial misconduct damages companies not only in terms of innovation and their ability to recruit top talent, but also because it is a material financial risk. She said it was up to the regulator to point out the “fallacy” that “having less than 30pc of your senior executives being anybody other than a white male is less risky”.
Morrissey said she hope(s) and pray(s) that the backlash against DEI” happening in the US “isn’t used as some sort of excuse not to tackle conduct and behavioural issues”. She said even if some of the data collection “might be controversial”, the FCA should not drop its focus on non-financial misconduct.
“Please let’s make sure that we continue to work to improve culture and conduct. This is the tenth (culture and conduct conference),” she said. “I don’t want to be celebrating the twentieth. I want us to have done something.”
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