FCA ramps up its data driven approach to D&I
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Data appears to be at the centre of everything; from understanding supply chain dynamics, to digital marketing. With its continued focus on becoming a data driven regulator, the UK Financial Conduct Authority (FCA) now expects firms to collect and analyse an increasingly broad array of data relating to diversity and inclusion.
The FCA acknowledges that most firms have made progress in collecting data on the gender and ethnicity of their staff, but is concerned that less than 20% of firms collect data on socio-economic background.
In a recent speech at the ABI Diversity, Equity & Inclusion Conference, Sheldon Mills, Executive Director for Consumers and Competition at the FCA, spoke about the importance of broadening data collection. He considers this will enable firms to see where they are “doing well” and where intervention may be required. This is an approach we see repeated in FCA communications relating to the new Consumer Duty, which comes into force next year.
Those firms who already collect D&I data will appreciate it is not a simple or binary task. Socio-economic data is one of the most complex categories to measure because it’s multi-factorial, subjective and aspirational. An individual may consider she moves from a working class background to a professional or intermediate one the moment she secures a highly paid job. Others may always consider her working class because of her accent, education, and connections.
Employers have grappled with these complexities over the years, asking questions about free school meals or whether parents went to university but none have hit the right mark in terms of response rate or value. The good news is that there is now one question that firms can ask that is easy to understand and gets the highest response rate according to the Social Mobility Commission:
What was the occupation of your main household earner when you were about aged 14?
For the 80% of firms not collecting data on socio-economic background, it’s a good starting point and a step that is not too onerous to implement. Neither would there be too many GDPR hurdles, as this data would not be considered special category data.
The FCA will be publishing the results of its research on “Understanding approaches to D&I in the FS industry”, shortly, and is expected to publish a consultation paper setting out proposed rules relating to D&I for financial services firms early next year. Firms should be prepared to engage with the regulator on D&I issues and to explain their own data strategies.