Cases of intimidation and harassment increase in city companies, concludes the FCA

There has been a sharp increase in non-financial misconduct at companies, according to a survey by the city regulator, but surprisingly, the data revealed that these companies took no action in more than half of the investigations.

The Financial Conduct Authority (FCA) hailed its survey of more than 1,000 firms as a “significant step” in understanding the scope of the issue and helping firms benchmark themselves against their peers.

Between 2021 and 2023, reports among UK wholesale banks, brokers, insurers and market intermediaries surveyed increased from 1,363 to 2,347.

Reports jumped 41% to 2,347 in 2023 from 1,670 in 2022 – as employees returned to the office post-Covid-19.

The survey, carried out among 1,028 companies in February, concluded that bullying and harassment, along with discrimination, were the most reported concerns over the three years – representing 26% and 23% of reports, respectively.

Complaints classified as “other” represented 41 percent of the total, raising questions about the findings.

These cases have ranged from intoxication, offensive language and data protection breaches to bringing pets to work and misuse of gifts and hospitality, which can also be considered financial misconduct.

The FCA noted that a high number of complaints can indicate a healthy corporate culture, where employees feel they can speak up. Likewise, it could suggest problems within the industry.

Despite this, financial companies took disciplinary or other action against employees in 43 percent of cases. The rest were not investigated, were unable to conclude, were not confirmed, were confirmed with no further action, or are still being reviewed.

Over the three years, 62 percent of reported incidents of discrimination and 47 percent of cases of bullying and harassment were not confirmed by the companies surveyed.

Companies took action in 73% of reports of violence or intimidation and in 64% of cases of sexual harassment.

By sector, wholesale banks recorded the highest proportion of cases in which no disciplinary action was taken. Of these complaints, 45 percent were not accepted and another 7 percent of investigations were not completed.

The FCA added that not all companies surveyed had disciplinary and whistleblowing policies in place.

“We want this data to support financial companies by providing their management teams and boards with an opportunity to consider whether they stand out, and, If so, why is that,” said Sarah Pritchard, executive director of markets and international at the FCA.

“Data requires context and careful interpretation. But by being transparent, we hope financial companies can benchmark themselves against their peers.”

There were 7.9 incidents reported per 1,000 employees at wholesale banks last year, compared with 6.1 for brokers and insurers, and five for market intermediaries.

Sexism in the city

Although wholesale banks had the lowest proportion of sexual harassment reports over the three years, they had a higher percentage of discrimination complaints than other sectors.

London market intermediaries had the highest relative proportion of incidents of violence or intimidation reported.

Insurers in the London market, including Lloyd’s managing agents, have seen a sharp increase in reports – from 102 in 2021 to 239 in 2023.

Lloyd’s of London has been trying to clean up its culture after a scathing Bloomberg report in 2019 highlighted a male-dominated workforce and a culture of binge drinking that had sexual harassment at its core.

In March, the Treasury Select Committee concluded an inquiry into “Sexism in the City” which called for urgent government action to eradicate sexual harassment, misogyny and gender imbalance across the financial sector, criticizing the slow efforts led by industry.

The investigation was partly prompted by allegations of sexual harassment against the hedge fund’s boss, Crispin Odey, who, on Thursday, was found to have returned to his eponymous firm.

Labor MP Meg Hillier, who became the committee’s new chair last month, said the FCA’s latest findings “appear to show that, far from the city dealing with these issues, it may even be going backwards”.

She added that the committee would seek “further clarity” from the regulator, including the extent to which the data reflects changes in the way companies report cases.

Use of NDA

The total number of confidentiality and settlement agreements signed by claimants fell over the three years, according to data heavily influenced by wholesale banks.

In 2021, claimants signed 126 settlement agreements and 87 confidentiality agreements, which dropped to 101 and 51, respectively, in 2023.

The Treasury Committee called for a legislative ban on the use of non-disclosure agreements (NDAs) in harassment cases as part of its inquiry – a recommendation the Conservative government rejected in May.

Discrimination was the most common type of case in which the complainant signed a settlement or confidentiality agreement.

Confidentiality agreements cannot be used to prevent public interest disclosures to the FCA.

Yvonne Braun, executive sponsor for diversity, equity and inclusion (DEI) at the Association of British Insurers, said the report “sends a stark reminder of how far we still have to go to eradicate this unacceptable behavior”.

“While the FCA survey only covers a subset of our members, it demonstrates that more companies need to implement a DEI strategy and speaking out policy, and our plan exists to help guide ABI members and others across the DEI sector. financial services, she added.

A spokesperson for banking trade body UK Finance commented: “The FCA research highlights the importance of workplace culture, and a key part of this is ensuring people feel able to speak up about behavior that falls below expected standards. .

“Based on today’s report, companies will review and, as necessary, improve the approach they take to address misconduct.”