The FCA continues investigation into handling of non-financial misconduct

On the 6th February, the FCA sent a letter to wholesale insurers and intermediaries requesting data on incidents of non-financial misconduct and how they are dealt with, and indicated that banks and brokers will be next to be contacted.  

The survey forms part of the FCA investigation into non-financial misconduct and use of non-disclosure agreements (NDAs) following the Treasury Committee’s Sexism in the City inquiry, during which MPs heard that the financial services sector remained an ‘old boys club’ where harassment and bullying is prevalent, and victims are frequently silenced by NDAs.  

In the letter sent to firms, the FCA has emphasised its view that “non-financial misconduct is misconduct and not an additional principle” and stated that they intend to use information gathered via surveys to gain a “clearer understanding of when and where non-financial misconduct occurs, provide […] a baseline assessment of each sector and inform our ongoing supervisory work programmes”.  

The compulsory survey requests three main points of data covering the past three years; the number and type of non-financial misconduct incidents recorded, the method of detection, i.e. discovery via whistleblowing or surveillance, whether incidents led to dismissals, warnings or no action, and the number of further outcomes, such as NDAs or tribunals.  

The survey will also include high-level questions on; regulatory references, governance and management information, appointed Representatives, diversity and inclusion policies and remuneration, disciplinary and whistleblowing policies and procedures.  

The data must include incidents of misconduct that occurred at the office, when working from home or off-site or during any work-related social events. The involvement of senior managers in incidents should also be noted.  

The regulator has clarified that it is not seeking granular detail of any incidents and recognises that “a higher volume of allegations collected by a firm is not necessarily indicative of a worse environment”.  

During the last two years, the FCA received 200 allegations of non-financial misconduct and, in 2022, Atrium Underwriters were fined £1 million for ‘serious failures’ to prevent discrimination, harassment and bullying. The investigation follows a period of mounting concern and scrutiny regarding non-financial misconduct in the sector. In 

With little response time to collate and provide the data, firms governing bodies, senior managers, compliance personnel and HR teams should be poised and ready to receive the survey and begin compiling all relevant information.  

Firms expecting to have received the survey that didn’t, or firms who received the survey but feel they shouldn’t, can contact their firm’s supervisor or the FCA Supervision Hub 

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