The Sexism in the City report highlights key issues affecting women in financial services and sets out a number of recommendations to address them.
By Nell Perks, Ella McGinn, and Charlotte Collins
On 8 March 2024, the House of Commons Treasury Committee published its report from the Sexism in the City inquiry, which sought to explore progress in four key areas affecting women in financial services since the Committee’s Women in Finance report was published in 2018. Overall
This annual publication explores some of the core focus areas for UK-regulated financial services firms in the year ahead. 2023 saw significant progress on the regulatory reform agenda, and many measures consulted on or reviewed as part of the Edinburgh Reforms will be finalised and/or implemented in the course of 2024.
We also saw the passing of the Financial Services and Markets Act 2023, many provisions of which have already come into effect and have made important changes to the
The FCA and the PRA have published their long-awaited consultations which aim to formalise how firms approach diversity and inclusion.
By Sarah E. Fortt, Sarah Gadd, Nicola Higgs, Andrea Monks, Rob Moulton, Nell Perks, Becky Critchley, Charlie Bowden, Ella McGinn, and Charlotte Collins
On 25 September 2023, the FCA and the PRA published separate but related consultation papers on D&I in financial services (FCA CP23/20 and PRA CP18/23). The regulators published a joint Discussion Paper in July 2021 on how they might accelerate the pace of meaningful change in relation to D&I and misconduct in financial services, by establishing minimum standards and providing firms with a better understanding of regulatory expectations (see Latham’s related blog post).
While some of the regulators’ proposed measures overlap, others are separate, and so dual-regulated firms will need to read both papers carefully. Equally, some of the measures would apply to all firms, but the more granular requirements would apply only to larger firms. Firms will therefore need to ensure they understand which requirements would be relevant to them.
A new Latham & Watkins guide examines the recent increase in whistleblowing and poses self-assessment questions against which firms can benchmark themselves.
By David Berman, Andrea Monks, Nell Perks, Nathan H. Seltzer, Becky Critchley, and Charlie Bowden
Many sectors, including financial services, have encountered a discernible increase in whistleblows in recent times — a trend that shows no signs of abating. Indeed, some whistleblowers have seen fit to publicise their concerns in the press and/or
By David Berman, Nicola Higgs, Jon Holland, Andrea Monks, Rob Moulton, and Nell Perks
The FCA stated that the perpetrator’s character is key to non-financial misconduct investigations, which suggests a mismatch with recent case law.
In last year’s Frensham[1] case, the Upper Tribunal considered how relevant a (non-dishonesty-based) criminal offence committed in one’s personal life is to the perpetrator’s regulatory “fitness and propriety”. The Upper Tribunal effectively reined in the FCA from too readily linking (i.e., considering as relevant) non-work-related misconduct to the perpetrator’s regulatory fitness and propriety to perform a regulated function. In doing so, the Upper Tribunal set out the approach to be taken when determining the relevance of non-financial misconduct in a regulatory context.
This Latham Client Alert highlights the difficulty in reconciling the FCA’s newly published ban of Mr Zahedian with the Upper Tribunal’s findings in Frensham. On the basis of the published Zahedian Final Notice[2], it is difficult to understand how (or even whether) the FCA followed and applied the approach laid down by the Upper Tribunal in Frensham. Indeed, Mr Zahedian may have felt somewhat aggrieved if he had read the Frensham judgment.
Monitoring the progress of the Financial Services and Markets Bill and regulatory divergence between the UK and the EU will continue as a key theme in 2023.
The Financial Services and Markets Bill leaves a significant amount of the essential regulatory detail to be developed later by HM Treasury (through regulations), followed by development of the specific rules by the regulators. Therefore, firms operating in the financial services sector will face legal and regulatory uncertainty as to the UK’s regime
The Financial Services Skills Commission has issued an insight paper outlining how companies can collect and evaluate data on employees’ socioeconomic backgrounds.
By David Berman, Nicola Higgs, Rob Moulton, and Dianne Bell
Socioeconomic backgrounds of employees and socioeconomic diversity at senior levels across the UK financial services industry is beginning to feature more prominently in diversity and inclusion (D&I) discussions. Several government and industry taskforces and studies conducted on the issue of social mobility and class advantages/disadvantages have revealed striking impacts of this bias within the UK financial services sector. Not only is the sector significantly reliant on individuals from higher socioeconomic backgrounds at the leadership level, but the studies also indicate that employees from working class or lower socioeconomic backgrounds are held back in a number of ways (which may lead to their eventual departure from the sector).
From a regulatory perspective, this lack of diversity at the senior level impacts the culture of a firm, raising concerns around, for example, groupthink and its impacts on effective decision-making.
This annual publication outlines some of the primary focus areas in 2022 for UK-regulated financial services firms. There has been a marked shift away from dealing with immediate post-Brexit priorities to more fundamental consideration of the direction of travel of UK financial services regulation, and this is borne out across many of the topics covered in this year’s publication.
While monitoring regulatory divergence between the UK and the EU will be a key theme for 2022, other familiar topics will
The role and expectations of bystander employees: the missing piece of the puzzle?
By David Berman, Catherine Drinnan, Joseph B. Farrell, Sarah Gadd, Lilia B. Vazova, and Nell Perks
While much attention continues to be paid to the implementation and maintenance of effective whistleblowing and speak-up frameworks (which tend to focus predominantly on reporting post-event, coupled with safeguarding the ‘reporter’ from any adverse consequences), and to the importance of creating a ‘psychologically safe’ environment in the workplace, there has to date been relatively little focus on the real-time interventional role of the employee bystander. For example, in a scenario in which an employee observes ‘toxic’ conduct directed at a colleague by a fellow employee, such as bullying, harassment or racism, should the witnessing employee have an obligation to intervene on behalf of the ‘victim’ (in addition to an expectation that they subsequently report the incident)?
This annual publication outlines some of the primary focus areas in 2021 for UK-regulated financial services firms. Some of these topics are attracting attention because they are an emerging trend, or because they are at a key stage in the implementation cycle. Other topics are longstanding, but remain at the top of the PRA’s and FCA’s priority lists.
While this publication looks beyond Brexit and COVID-19, inevitably, in the short term, these issues continue to be dominant themes.
We hope