The Financial Conduct Authority (FCA) has pledged to take action against sexual harassment in the financial services industry, claiming to have already denied authorisation to "approved persons" based on their non-financial conduct.
In a letter to the Women and Equalities Committee on the 28 September, Megan Butler, executive director of investment, wholesale and specialist supervision at the FCA, reiterated the body's view that sexual harassment falls within their regulatory scope.
As part of this scope, Ms Butler said the FCA will continue to enforce individual accountability within the industry and assess whether senior staff are "fit and proper" to fulfil their roles.
The regulator's Senior Managers and Certification Regime (SMCR) currently applies to all banks, building societies and credit unions to ensure senior executives are directly accountable for functions which fall under their responsibility.
The SMCR was introduced in March 2016 with an aim to reduce harm to consumers and strengthen market integrity by making individuals more accountable for their conduct and competence.
The regime is expected to be rolled out to insurers from December 2018 and all other authorised authorised firms under the Financial Services and Markets Act from December 2019.
Ms Butler said in firms where the regime did not currently apply, the FCA assessed an employees’ "fitness and propriety" upon application to be authorised as an "approved person" - an assessment in which an individual’s honest and integrity are "explicit factors".
Ms Butler confirmed instances upon which the regulator, or a supervised firm, had already found an individual not to be "fit and proper on the basis of their non-financial conduct" and their appointment to the role therefore denied.
Citing legal reasons, Ms Butler said she was not in a position to discuss specific cases.
The letter identified tolerance of sexual harassment as a potential drive for poor culture in the financial services, outlining an expectation that firms foster a healthy culture to support the "spirit of regulation in preventing harm to consumers and markets".
Her comments come after she told MPs back in May that the FCA does not believe a culture that tolerates sexual harassment and other forms of behavioural misconduct is a culture that will encourage a 'safe to speak up' environment.