It is well known that the financial services sector is not representative of the general population. With this in mind, in late September last year, the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) each published consultation papers. The proposals within the papers are largely aligned, but they do diverge in some respects. Their aim is to “drive change” by linking diversity and inclusion (D&I) to a firm’s overall strategy, ensuring that strategy is embedded in the firm’s day-to-day operations and culture, requiring firms to gather D&I data to inform improvement, and developing an understanding of “what good looks like” across the sector.
We wanted to ensure that the proposals are on your radar. Although they are just proposals at this stage, there is a clear direction of travel towards encouraging diversity in financial services. The likelihood of these proposals being amended substantively before implementation is perhaps limited, although following the House of Commons Treasury Committee Report on “Sexism in the City” published on 5 March 2024, there may be some amendments in terms of the data gathering and reporting requirements, but these are unlikely to fall away in their entirety.
Firms that are in scope would be well advised to assume that the proposals will come into force in broadly the terms outlined in the consultations – it is more of a “when” than an “if”.
Next Steps
In terms of timeline, while there will be a 12-month period between confirmation of the final rules (likely to be in 2024) and those rules coming into force (probably 2025), we anticipate that firms will not wish to wait until then to start preparing.
To assist with your planning, we have created a Roadmap which sets out an overview of the key steps firms may need to consider (with suggested timings) to ensure that they are ready to meet the requirements once the new rules come into force.
