A comprehensive review by the FCA reveals significant insights into workplace culture within the financial services sector.
- The number of non-financial misconduct allegations has surged by 72% from 2021 to 2023.
- Bullying, harassment, and discrimination account for nearly half of reported incidents.
- High levels of reporting may indicate a healthier organisational culture, according to the FCA.
- The findings are intended to help firms benchmark and improve their internal reporting systems.
A recent survey conducted by the FCA covering more than 1,000 financial services firms has highlighted a dramatic rise in allegations related to non-financial misconduct. Between 2021 and 2023, such allegations have climbed by an alarming 72%, moving from 1,363 cases in 2021 to 2,347 cases in 2023. This increase sheds light on a growing awareness and willingness among employees to report unacceptable behaviours in the workplace.
The survey primarily focuses on how institutions like investment banks, brokers, and wholesale insurance firms manage and document instances of non-financial misconduct. Bullying and harassment emerged as the predominant issues, representing 26% of the complaints, followed closely by discrimination at 23%. Interestingly, a broader category labelled ‘other’ accounts for 41% of the incidents, illustrating the complexity of categorising such matters.
Despite the significant rise in allegations, the FCA advises caution in interpretation. A higher number of complaints might reflect a more open and secure environment where employees are encouraged to voice their concerns without fear of reprisal. Conversely, a low incidence rate might suggest underreporting or an atmosphere of fear and repression.
The FCA also noted a variety of methods through which these issues come to light. While many firms utilise internal monitoring mechanisms, formal whistleblowing processes remain the most common approach to uncover misconduct.
Sarah Pritchard, executive director of markets and international at the FCA, emphasised the value of transparency, stating, “We want this data to support financial firms by providing their management teams and boards with an opportunity to consider if they stand out, and, if so, why that might be.” Her comments underscore the importance of using these insights for self-assessment and improvement.
Jill Lorimer, a partner at a financial services regulatory team, pointed out the ongoing struggle firms face in navigating these issues. She noted, “Today’s survey suggests a growing awareness of what non-financial misconduct is and that regulated firms are supporting and policing reports of NFM in various ways.” However, she indicated that smaller firms particularly may find it challenging to address these complex issues without comprehensive guidance or previous benchmarks.
The publication of the survey’s findings presents an opportunity for firms to align their practices with the FCA’s expectations and to develop more robust systems for addressing misconduct. The data urges firms to scrutinise their fitness and propriety rules and to prepare for impending regulatory changes.
The FCA’s survey underscores the necessity for financial firms to critically evaluate and fortify their approaches to handling workplace misconduct.
