FCA to probe City firms on bullying and sexual misconduct reports
City firms will be probed on how they deal with reports of workplace sexual harassment and bullying, including the use of NDAs, the financial watchdog has confirmed, after the limited progress of industry-led efforts.
Sarah Pritchard, markets boss at the Financial Conduct Authority (FCA), told the Treasury Committee on Wednesday that the regulator would do more to crack down on non-financial misconduct in the Square Mile.
She gave evidence to the committee’s Sexism in the City enquiry, which is evaluating the impact of the Treasury’s Women in Finance Charter that asks financial services firms to commit to gender balance
The FCA’s new probe comes after a “steady increase in the number of reports coming through to our whistleblowing line” in recent months, Pritchard said.
Non-financial misconduct has received increased attention after a series of allegations against hedge fund founder Crispin Odey and officials at The Confederation of British Industry.
Pritchard told MPs that the regulator would ask financial services firms for data on workplace misconduct complaints and evaluate “methods of detection and methods of resolution”.
The FCA aims to finish its investigation by the summer, but it is not clear if or when the findings will be made public.
Existing measures from the FCA do not require firms to admit to using NDAs to deal with misconduct.
Pritchard noted that there could be “a number of valid reasons why an entity might use a non-disclosure agreement to keep confidential the commercial terms of a settlement”.
FCA chief executive Nikhil Rathi, who also gave evidence on Wednesday, added that “there could be a case for looking at” requesting data on the use of gagging clauses.
“Current practice amongst financial services firms is very mixed as to how they address non-financial misconduct in the workplace, particularly claims of bullying and discrimination,” Eleanor Rowswell, an employment lawyer at Farrer & Co, told City PM
“Clarity on what is required is important – if an individual falls short of the behaviours expected of them, this may have regulatory implications and make it very difficult for them to be employed again in certain positions.”
Robin Henry, a partner at Collyer Bristow, said the FCA was likely “responding to pressure from Parliament and the general community view that non-financial misconduct needs to be taken more seriously and financial firms held to account in a more transparent way”.
He added: “The key question is to what extent the FCA will be willing to use its powers once it has received the information it has requested on the scale of the problem.”