The Bank of England (BoE) has published a speech by Anna Sweeney, Director, Insurance Supervision, on increasing diversity in the financial services sector, in which she expressed the importance of making impactful change on diversity across the sector as a whole, with the Prudential Regulation Authority (PRA) playing a crucial role in facilitating this. Anna emphasised the need for improved diversity, conduct and culture in the workplace, and supported and acknowledged efforts that have been made to aid such change so far.
- The PRA is interested in how the quality of decision-making is impacted by “groupthink”. In light of the global financial crisis, the PRA understands that uniformity is a poor basis from which to challenge existing practices.
- PRA rules are hugely important for emphasising the need to promote diversity of skills and experience at board level. Since April 2018, the PRA has required insurers to have a policy in place that does this and considers a wide range of qualities and competencies in recruitment.
- Recent reports of sexual harassment and bullying allegations may impact the PRA’s perception of the fitness and propriety of individuals under the senior managers and certification regime (SM&CR).
- Cultural change needs to occur in firms to allow staff to express concerns where there are issues that could impact the financial soundness of the firm. Culture also acts as an indicator to the Financial Conduct Authority (FCA) as to how firms could treat customers.
- The PRA welcomes and supports initiatives by Lloyd’s of London and the training that they have provided to improve diversity, conduct and culture. Along with the FCA, the PRA will closely monitor progress and engage in talks with Lloyd’s to see demonstrable progress.
There is a growing awareness of the importance of diversity within the financial services sector and beyond. This speech by the BoE demonstrates their focus on improving diversity in the sector, as well as their support for the ways in which financial services firms are trying to achieve this. Lloyd’s of London are leading by example and we hope that they inspire other financial services companies to follow in their footsteps.
Tapestry has significant experience advising financial services firms on their remuneration compliance. If you would like to discuss your compliance with us, please do contact us.