The long and winding road to DE&I in financial services

It’s easier said than done

When the FCA and PRA first published their DE&I discussion paper in July last year, there was muttering about it being “easier said than done” from those whose bread and butter work is DE&I or from financial institutions who have already heavily invested in trying to make a difference in the area. 

The FCA does its due diligence

A good deal of credit must now go to the FCA, because in the period since July 2021, it has been trying to get a better understanding of what is happening in this space within regulated firms. The results were published last week in a document called Understanding Approaches to DE&I in financial services. Their due diligence comprised a pilot survey, and a multi-firm review across multiple parts of the financial services section, part of which included a 90 minute structured interview with a senior leader.

No stone unturned

The report is jaw-dropping in the extent to which it both investigated the issues and challenged them. Its message is simple: what is being done currently is not enough or, in some cases, non-existent, generic, ineffective and rudderless. The FCA accepts that to do better with DE&I means changing the wider culture, which, of course, can’t happen overnight. But it won’t happen at all if strategies and approaches are not targeted, measured and multi-dimensional. Senior Managers are expected to take a real lead here.

Advice to Senior Managers 

Read the report. It’s approximately five pages long and getting a briefing on it misses the point. It will no longer be enough to be able to cite a few gender or ethnicity initiatives or get the Head of HR or DE&I to accompany you at regulator interviews. You will need to own this to make the kind of difference that the FCA is expecting.

Next Steps

The report covers everything from culture to speak up, exit interviews to targets and links to remuneration. In the New Year, alongside our regulatory colleagues, we will publish a series of briefings on the various aspects of this topic. The FCA will do a round of consultation in 2023 before any decisions are made. In the meantime, all regulated firms should benchmark where they lie in terms of what the FCA considers an effective strategic approach.