The Financial Conduct Authority has said it will use the senior managers regime to take action on sexual harassment.
Speaking in front of a committee of MPs this morning (23 May), Megan Butler, director of investment, wholesale and specialist supervision at the FCA, said using the new rules in this way would be part of assessing if an individual was fit and proper to work in the financial services sector.
She said: "From our perspective misconduct is misconduct, whether it is financial or non-financial. The key tool that we deploy in this area is what we call the senior managers and certification regime.
"That is a regime which holds the senior leaders of financial institutions to account and holds them responsible for the delivery of proper outcomes through that business, with a particular emphasis on the cultural values and norms within that business.
"They are particularly held to account for determining whether their key staff are fit and proper to do their roles. And when we look at fit and proper that is not merely within the context of financial decision-making, it's in a broader cultural set of values. It encompasses the whole of that individual.
"We do not believe that a culture that tolerates sexual harassment and other forms of behavioural misconduct is a culture that will encourage a 'safe to speak up' environment, an environment where the best business decisions get taken, the best risk decisions get taken.
"We do not compartmentalise that away from a consideration of what makes an individual fit and proper and we expect firms to take all those aspects into account when they look at whether their key individuals are fit and proper to do their roles."
The senior managers regime was introduced in March 2016 to tighten up senior staff accountability in banks and is now being extended across the whole of financial services.
Its aim is to reduce harm to consumers and strengthen market integrity by making individuals more accountable for their conduct and competence.
Advisers are expected to come under the remit of the senior managers regime in mid-to-late 2019.
Speaking to the House of Commons's women and equalities committee, Ms Butler said: "There are a range of things that can and do [speak to fit and proper] that we have focused on. I think there has been a longer term focus, but more recently in terms of the sort of environments, the sort of incentives, the perks that get to particular people in certain jobs within financial services.
"The behaviour at those definitely speak to fit and proper. I would also say this isn't just the regulator saying this, most of the firms with whom I interact would also agree with me."
Ms Butler said the FCA had seen firms cutting pay and, in the most extreme cases, dismissing people over sexual harassment.
damian.fantato@ft.com
