The UK’s financial services regulator the Financial Conduct Authority has said it will look at how investment banks and commercial insurers deal with sexual harassment, bullying and other non-financial misconduct.
The review – to be concluded by the middle of the year – comes amid complaints from alleged victims that they are often silenced or forced to quit.
Sarah Pritchard, an executive director at the Financial Conduct Authority, told MPs on Wednesday that the watchdog would be assessing how much misconduct was taking place and how much of it was being detected and resolved.
“We can use what [the survey] tells us to take stock, to share best practice … but also, crucially, to inform our supervisory programme when the new rule sets come into place,” she told parliament’s cross-party Treasury Committee.
Sexual harassment
Worker Protection Act: how should HR prepare for sexual harassment obligations?
The survey, she said, would shed light on how employers decided staff were fit and proper to work in finance, was announced as Treasury Committee MPs held the final session of the Sexism in the City inquiry into tackling sexual harassment and the “old boys club” culture in the industry.
Last year saw a welter of sexual assault and misconduct allegations in the higher echelons of the finance sector, including allegations against hedge fund founder Crispin Odey.
Last November, about 40 women from 30 financial services companies met with the Treasury Committee to share their personal experiences of sexism and misogyny anonymously.
In a summary of discussions published by the committee yesterday, most attendees said they had directly experienced sexual harassment or knew of colleagues who had. But those who had experienced misconduct said they often did not report it because they feared they may have to move teams or leave the business.
The committee heard that non-disclosure agreements were widely used in sexual harassment cases effectively silencing victims while protecting perpetrators and removing an incentive for firms to tackle such misconduct.
Recommendations aired by those attending the committee included requiring firms to report the number of NDAs in such cases and that the “fit and proper” standards of behaviour necessary to work in finance include conduct. There should also be a credible threat of fines and penalties for those condoning or perpetuating sexual misconduct, MPs heard.
Absence of a list of proscribed offences
Managing director of the FCA Nikhil Rathi told MPs that as things stood even a man’s conviction over child sexual grooming – a real case – was not enough to prohibit him from the sector.
“The fact that there isn’t a prescribed list of those serious offences where if you are found convicted of those offences you are automatically prohibited from a regulator sector … means that we have to, in each case, demonstrate that the conviction or the conduct is sufficiently relevant to the financial services role that they are performing that it merits us using our prohibition powers,” he told the Treasury Committee.
In the end, the FCA had been able to ban the man, but because he had breached his bail conditions and did not inform the FCA of his conviction, not because of his initial offence.
Most women who spoke to the committee confirmed that there had been little progress since the MPs’ last report on sexism in the City in 2018.
Overt sexism and misogyny in the workplace had been reduced, but the mindset was still widespread and people’s behaviour has “become more underhand and pernicious”, the committee said.
“Attendees reported that, for most allegations of sexual misconduct, little or no action had been taken against the perpetrator who was often able to continue progressing in their career, while the woman reporting the incident often faced negative consequences, including being made to move teams or being forced out of the company or the industry completely,” the committee said.
Anonymity conundrum
Rathi told the committee that although the FCA was able to handle anonymous tip-offs, it could be hard to take action if people did not want to be identified.
“The challenge on the anonymity point … is that if we are going to use our prohibition power, we are ending the livelihood of an individual,” he said.
“And that individual will say they have a right to know the evidence upon which we are basing our decision.”
Michelle Last, employment partner at Keystone Law said the committee findings were “disappointing but not surprising”. She added that “too many employers fail to take proper action when dealing with sexual harassment allegations, meaning victims either must carry on working with the perpetrator or leave their job. This is particularly concerning in an industry that is already male-dominated.”
Inactive employers ultimately paid a price too, she said, because “they are seen as colluding in covering up sexual harassment and assault, resulting in serious reputational damage, departing employees and potential employment tribunal and personal injury claims.”
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
HR opportunities in finance on Personnel Today
Browse more HR opportunities in Accountancy, Banking, Finance and Insurance
