London market falling down on DEI as misconduct goes on rise: FCA
The London wholesale market is backsliding on attempts to improve corporate culture and inclusiveness, with “a concerning increase” in incidents of misconduct now pushing the UK’s regulators to threaten a new wave of enforcement actions.
“The wholesale insurance market in particular has a long way to go in having an inclusive culture with the appropriate channels for staff to feel psychologically safe to speak up and raise concerns,” the UK’s regulatory office FCA said in a ‘Dear CEO’ oversight letter to the wholesale insurance market.
Prior warnings have triggered some response, but backsliding is apparent as “firms have generally not been prioritising these issues.”
“Over the past year we have seen a concerning increase in incidents involving non-financial misconduct” in the wholesale market, that have been reported in the wholesale market,” Matt Brewis, the FCA’s director of insurance, wrote.
A fresh round of regulatory conversations with non-executive directors on corporate culture and non-financial misconduct is pending and the FCA “expects firms to be ready to show us how they are making progress in this area.”
“We are ready to use our full range of regulatory tools, including enforcement action, against firms and individuals where we see instances of non-financial misconduct.”
Comments come part and parcel with a broader update to the FCA’s oversight guidelines, tipping the hat for the first time to the FCA’s secondary mandate to promote competitiveness. The letter further speaks to the need for operational resilience, includes an endorsement of the need for tightened cyber wordings, calls for more steps to embed the UK's consumer duty requirements and for the prevention of financial crime.
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