A discussion paper from the UK regulators (BoE, PRA, and FCA) sets out policy options to improve diversity and inclusion in the financial sector. The paper is focused on the use of targets for representation, measures to make senior leaders directly accountable for diversity and inclusion in their firms, linking remuneration to diversity and inclusion metrics, and the regulatory approach to considering diversity and inclusion in non-financial misconduct. It is also focused on the importance of data and disclosures to enable firms, regulators, and other stakeholders to monitor progress. The paper, in Appendix 1, sets out a list of questions for seeking feedback, which is requested until September 30, 2021. The feedback and data received will be used to develop detailed proposals, with a joint consultation planned for the first quarter of 2022, followed by a policy statement in the third quarter of 2022.
The discussion paper sets out the role of the regulators, the existing requirements, and expectations from firms. The paper explains why good data are critical and discusses the importance of measuring progress and reporting to improve progress on diversity and inclusion. The UK regulators are seeking feedback on how they should define success measures for the desired outcomes; the paper discusses data and other levers, such as accountability, that the UK regulators believe are essential to be able to support change and monitor progress. To assess progress in this area, the authorities are proposing collecting data from firms about their workforce. Prior to this, there will be a one-off, pilot survey later this year, which will help to develop the proposals set out in the discussion paper and test how firms can provide data with a view to considering regular reporting in the future. The regulators are also seeking views on how any changes could be tailored to specific categories of firms to ensure it that the expectations are proportionate.
The paper outlines different policy initiatives that could be effective for driving and supporting change. These generally build on existing requirements and the regulators’ wider policy and supervisory frameworks. The regulators are working together to clarify their regulatory approach to diversity and inclusion in pursuit of their statutory objectives and having due regard to their Public Sector Equality Duty. This discussion will support engagement with stakeholders and policy development, helping to determine which interventions could have the greatest impact. Contributions are welcome from all parts of the financial sector, including firms, industry groups and trade bodies, consumer groups and individual consumers, policy makers and other regulatory bodies, industry experts and commentators, academics and think tanks, and organizations representing the interests of groups of people. Stakeholders are also encouraged to provide examples of positive industry practices that can be learned from. Given the different legal and supervisory frameworks for financial market infrastructure firms, BoE plans to separately consider how to develop proposals to promote diversity and inclusion for these firms.
Comment Due Date: September 30, 2021
Keywords: Europe, UK, Banking, Insurance, Securities, Diversity and Inclusion, ESG, Reporting, Proportionality, PRA, FCA, Social Risk, BoE
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