The FCA, the PRA and the Bank of England have issued a joint Discussion Paper on diversity and inclusion in the financial sector.
The three main UK financial services regulators, the Financial Conduct Authority (FCA), Prudential Regulation Authority (PRA) and the Bank of England (BoE) (the UK Regulators), have issued a joint Discussion Paper which is intended to form the basis of proposed rules and guidance on diversity and inclusion in the financial sector.
The proposed rules would potentially apply to all financial services firms (Firms) including FCA-authorised firms (including payment services and e-money firms as well as credit rating agencies and recognised investment exchanges), PRA-regulated firms and financial markets infrastructures regulated by the BoE. The UK Regulators are considering whether any requirements should be applied only to UK Firms or also to overseas Firms operating in the UK. The rules will be subject to proportionality, which may mean that some firms receive a lighter-touch version of the rules. Nevertheless, the UK's financial services regulators are laying down a clear marker on the direction of regulatory travel in this area. All firms whose core business is financial services should assume that they will be subject to some version of these requirements.
The rules would require firms to take diversity and inclusion into account in their policies, governance arrangements, accountability, remuneration arrangements and disclosure and would also form part of the UK Regulators' approach to supervision.
There will be a consultation in Q1 2022 and a Policy Statement in Q3 2022. The closing date for feedback on the Discussion Paper is 30 September 2021.