The rumours have been true…The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) confirmed on 12 March that they will not be taking forward their proposed rules aimed at improving diversity and inclusion in regulated firms. The FCA and PRA had set out proposals in September 2023 for firms to report wider data on staff diversity.
The reasons given were the broad range of feedback received (initial reactions to the proposals from the market were mixed), expected legislative developments coming out of the government and to avoid additional burdens on firms at this time.
Further, the FCA confirmed that their work on tackling non-financial misconduct would be prioritised; the FCA confirmed their belief that this work can help to improve outcomes for markets and consumers and reduce harm. The FCA commented that they want to ensure that their approach is proportionate and aligned with planned legislation, so they would like to take some further time to get things right. We should expect final rules on non-financial misconduct by the end of June this year.
In the same press update the FCA confirmed that they will not take forward their proposal to shift from an exception circumstances test to a public interest test for announcing investigations into regulated firms. On this, Nikhil Rathi, Chief Executive of the FCA, commented:
“We are speeding up our enforcement work. On our enforcement transparency proposals, we have always aimed to build a broad consensus. Considerable concerns remain about our proposal to change the way we publicise investigations into regulated firms, so we will stick to publicising in exceptional circumstances as we do today. We will implement changes which have commanded wider support and which we believe will help support our efforts to protect consumers from harm.”
The announcements on 12 March demonstrate the regulators’ intentions to align themselves with government policy and plans for legislation as well as reflecting a growing move away from diversity reporting initiatives worldwide.
Meanwhile, the rules on non-financial misconduct have been long-awaited and it remains to be seen if we will have the final rules at last by Summer 2025.
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The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at March 2025.