Speaking at City and Financial's Women in Finance Summit 2019 today (June 10) Nausicaa Delfas, executive director of international at the FCA, pointed to an increase in non-financial misconduct as a threat to the sector's diversity.
Ms Delfas said: "This type of serious misbehaviour is toxic to a working environment and can lead to bad outcomes for customers, staff, stakeholders and the firm.
"In our view, tolerance of this sort of misconduct would be a clear example of a driver of unhealthy culture. This area clearly requires management attention and a broader change in the firms’ mindset."
Ms Delfas said the City watchdog expected companies to foster "healthy cultures where staff are committed to preventing harm to consumers and markets", where the best talent is retained and where the "best risk decisions" are taken.
In a letter to the Women and Equalities Committee last September the FCA 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.
The FCA has previously confirmed sexual harassment falls within its regulatory scope.
In today's speech Ms Delfas said the industry was making progress towards diversity but said there was "further to go".
She said: "We look at how a firm’s culture is shaped by drivers such as incentives and remuneration, training, leadership, governance arrangements, purpose, diversity and inclusion.
"A culture that pursues diversity is one that will have wider benefits for an organisation, and its customers – one that is open minded, and aspiring to improve."
The FCA has a target of 45 per cent of its senior leadership team to identify as female by 2020, and 50 per cent by 2025, with its latest figures at the end of March showing a representation of 39 per cent.
A signatory of HM Treasury's Women in Finance Charter, the regulator currently has an average gender pay gap of 18.5 per cent.
Ms Delfas said: "The real value of gender pay gap reporting is that it shines a light on the disparity between men and women at different levels of organisations.
"It is a useful tool to make us all think more deeply about why those disparities exist, and what we can do about them."
The FCA has set itself a target for 8 per cent of its senior leadership team to identify as black, asian and minority ethnic by 2020, rising to 13 per cent by 2025 - it currently sits at 5 per cent.
rachel.addison@ft.com
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