Conservative MPs have accused the financial services regulator of “mission creep” by seeking to expand its remit to include stamping out sexism in the City. The Telegraph has the story.
Fourteen MPs in the Common Sense Group have now written to the Government criticising the FCA’s proposals.
Signatories include Sir John Hayes, the Chairman of the group, Miriam Cates, Danny Kruger and former ministers Caroline Johnson and Jonathan Gullis.
The letter, which has been sent to Andrew Griffith, the Economic Secretary to the Treasury, takes issue with the “proposal by the FCA to impose stricter rules on firms in an attempt to stamp out sexism in the City of London”.
It adds: “We are of course wholly supportive of the ambition to stop sexism, and most of all sexual harassment and abuse, in the workplace.
“However, a wide range of laws (including criminal law, employment law and equalities law) and enforcement agencies already exist to protect employees’ rights.
“The FCA’s role is confined solely to protecting consumers by promoting competition and ensuring market integrity. This is a vital role, regulating the largest sector of our economy – a sector which, in addition to the wealth it generates for the U.K., gives tremendous career opportunities to women.”
The letter says that the FCA’s justification for expanding its remit to target non-financial misconduct on the grounds that it can affect the performance of businesses and the wider market is “tendentious”.
It warns that any resources dedicated to such activities will be “taken from the genuine purposes of the FCA, namely helping to ensure the City of London is a competitive and dynamic financial centre”.
The MPs also claim it is part of a “very concerning pattern of behaviour by the regulator”, referring to how the FCA has called for workplaces to be “psychologically safe” for employees.
Worth reading in full.
A large percentage of the work we do at the Free Speech Union involves defending people from complaints made by political activists to professional regulators. Without exception, these complaints are thoroughly investigated, often over the course of several months. If the FCA requires financial companies to guarantee their employees feel ‘psychologically safe’, that will open the door to thousands of vexatious, politically motivated complaints.
The full text of the letter reads as follows.
We write as members of the Common Sense Group of MPs, with reference to the proposal by the Financial Conduct Authority (FCA) to impose stricter rules on firms in an attempt to stamp out sexism in the City of London. Harassment of any kind has no place in good businesses or in the world of work.
We are of course wholly supportive of the ambition to build and maintain workplaces which are respectful and harmonious. However, a wide range of laws (including criminal law, employment law and equalities law) and enforcement agencies already exist to protect employees’ rights. The FCA’s role is confined solely to protecting consumers by promoting competition and ensuring market integrity. This is a vital role, regulating the largest sector of our economy – a sector which, in addition to the wealth it generates for the UK, gives tremendous career opportunities to women.
It is striking that despite its own name the Financial Conduct Authority considers “non-financial misconduct” to be within its remit (on the tendentious grounds that these forms of misconduct can affect the performance of a business and the wider market).
We were concerned to read in the letter from Nikhil Rathi, CEO of the FCA, to the Treasury Select Committee in June this year, that the organisation “[has] significantly increased resources” devoted to investigating non-financial misconduct. These are resources that are taken from the genuine purposes of the FCA, namely helping to ensure the City of London is a competitive and dynamic financial centre.
This is part of a very concerning pattern of behaviour by the regulator.
A public consultation document already issued by the FCA threatens to require companies with over 250 employees to introduce formal diversity and inclusion strategies. The FCA then proposes that firms be required to set targets based upon these strategies. The FCA’s approach uses contested concepts like ‘intersectionality’ and ‘equity’ throughout its proposed model.
Perhaps most troublingly, the regulator requires regulated firms to create workplaces that are “psychologically safe” for employees. One need only look at the ‘safe space phenomenon’ at universities that the Government legislated to stop to see that this new proposal risks creating a regulator-backed cancel culture in financial services.
A separate letter issued last week by the FCA to insurance companies says the FCA’s diagnosis that “areas for improvement” in the sector “include improving diversity, equity and inclusion (DEI)”. The FCA goes on to say that it will ensure “firms meets our requirements” around DEI and that the regulator is “ready to use our full range of regulatory tools, including enforcement action, against firms and individuals where we see instances of non-financial misconduct”.
In short, we fear that this regulator has adopted an activist interpretation far removed from the principle of equality that our voters would understand or support.
We would be grateful if you could reassure us that the Government does not support the decision of the FCA to impose more onerous expectations on businesses; and that the Government considers the remit of the FCA to be restricted to its statutory obligations, without the ‘mission creep’ apparent this week.