Effective action must be taken quickly so the financial services industry is “truly reflective” of the people it serves, the City watchdog has said.
Jonathan Davidson, executive director of supervision at the regulator, said the events of this year had had a “significant impact” on employees in the industry, who were “rightly highlighting that more needs to be done”.
Speaking at the Culture and Conduct Forum for the Financial Services Industry this morning (November 26), Mr Davidson added: “Diversity and inclusion is a multi-faceted issue that requires serious thought and attention.
“The events of this year – the tragic and shocking death of George Floyd, and the Black Lives Matter movement – have increased the public consciousness about the inequalities and injustices that have no place existing in modern society.
“It’s clear that effective action needs to be taken quickly for financial services to become an industry that is truly reflective of the people it serves.”
Mr Davidson told delegates that culture remained a “key area of focus” for the Financial Conduct Authority.
Over the last few years, the regulator has increased its focus on non-financial misconduct — and the lack of safety and inclusion it created — which often proved a barrier to diversity in the workplace.
Mr Davidson said: “Without safety, without inclusion, the value of diversity is lost and the diversity will eventually wither and die.
“A culture where non-financial misconduct is tolerated is not healthy, it’s not safe and it’s not acceptable.”
The FCA recently prohibited three advisers from working in the financial services industry for non-financial misconduct.
On a more positive note, Mr Davidson said the coronavirus crisis had “purposefully swept away” many of the big barriers to healthy cultures.
Such barriers — including bureaucracy, slow and controlled approaches and a lack of empowerment and engagement of mid-management — had been dismantled as the need to support customers and colleagues at quick speed during the crisis had empowered staff, Mr Davidson said.
He added: “Several bank CEOs found that front line staff showed ingenuity and judgement in adapting to ensure continuation of customer service especially to the vulnerable.
“It has created the trust for colleagues to do the right thing at speed without paralysing fear of the consequences.”
Mr Davidson said that financial firms had successfully acted quickly and responsively to the unprecedented need for “radical changes”, noting that shake ups that would have taken weeks or months before had taken mere days.
But more change and more challenge was on the way, the FCA warned, from the macro-economy, Brexit, digital technologies and markets.
The City watchdog said it placed great emphasis on leadership and how they respond to these challenges, noting that extending the Senior Managers and Certification Regime to 48,000 firms would increase expectations on leaders.
Mr Davidson also announced the FCA’s own management reshuffle, revealed by FTAdviser yesterday, which will see the integration of the supervision and policy functions at the regulator.