Financial firms regulated by the Financial Conduct Authority (FCA) should prepare for harassment and misconduct surveys arriving next week. As confirmed by the regulator, the first questionnaires have already been sent to insurance companies, and next in line are banks and brokers.

FCA Harassment Surveys Incoming for Brokers

The FCA has already sent detailed surveys to wholesale insurance firms, asking for data on complaints, disciplinary actions, and use of non-disclosure agreements (NDAs) related to issues like bullying, sexual harassment and discrimination over the past three years.

Now, the regulator is expanding the survey to banks and brokers. Firms will have just four weeks to collate and submit extensive information on any allegations or evidence of non-financial misconduct since early 2021, according to information confirmed by Financial News (FN).

“We will be extending our survey to wholesale banks and brokers next week,” the FCA spokesperson commented for FN. “This work is intended to support the FCA’s understanding of the types and instances of non-financial misconduct firms are seeing and how they are handling it.”

While the FCA stated that more disclosures don't necessarily indicate a worse environment, the survey results could pressure firms toward greater transparency. The regulator also wants firms to take allegations seriously and have procedures to investigate promptly and take appropriate action.

This crackdown comes amid growing scrutiny of misconduct in the financial sector. Over two years, the FCA received 200 suspicions related to non-financial misconduct and started several cases. What is more, specialty insurer Atrium Underwriters was fined £1 million for failures allowing discrimination and harassment issues to persist unchecked.

Brokers should inform compliance teams and senior management to expect the survey next week. Given the short turnaround, firms should quickly pull together relevant misconduct data to demonstrate an environment of accountability rather than attempting to hide problems.

Sexism in the City

We first learned a month ago that surveys of this type would be introduced. The FCA Executive Director, Sarah Pritchard, told lawmakers the questionnaire aims to "take stock" and "share best practice" once completed by mid-year. But, more importantly, it will shape the FCA's supervision as new conduct rules are implemented.

The questioning occurred during parliament's "Sexism in the City" inquiry into sexual harassment and old boys' club dynamics. The need for action is clear. A recent summary found most women in finance directly experienced or knew of sexual harassment but faced barriers reporting it.

Firms frequently use NDAs to protect reputations and silence victims after settlements. But, this removes incentives to seriously address problems. Based on recommendations, the FCA could threaten fines for misconduct enablers, make firms disclose NDA numbers, and expand its fit and proper standards around non-financial conduct.

However, the number of women in finance is growing. Last November, the trade associations for hedge funds, banks, and insurance firms provided updated workforce figures to the UK lawmakers examining sexism in finance. Within the hedge fund sector, the proportion of women increased from 19% in 2019 to 27% in 2023.