Diversity and inclusion in the financial sector – working together to drive change – PLSA response to FCA Consultation CP23/20

The FCA launched their consultation: Diversity and inclusion in the financial sector – working together to drive change, in September. They set out proposals for what they describe as a flexible and proportional D&I regulatory framework for FCA firms. The stated objectives are to achieve healthier firm cultures, reduced groupthink, increased diversity of talent and a greater understanding of and provision for diverse consumer needs.  

The proposals would see all firms required to meet minimum standards to carry on regulated activities by embedding rules around diversity and inclusion into fitness and propriety rules, the code of conduct and the threshold conditions. In addition, large firms would have additional reporting and disclosure requirements as well as requirements to create evidence-based D&I strategies and set targets to drive progress. 

We outline how we are broadly supportive of the FCAs proposed approach. We recognise the proposals as good start point, but in a number of areas, have highlighted that we would like to see the FCA go further. We think the FCAs end goals must be clarified, and we are seeking further information on how reporting leads to effective change. In addition, we think it is vital that more clarity is provided on how more will be done to ensure small firms work towards better D&I. They are currently exempt from significant requirements.