The Financial Conduct Authority (FCA) has given further indications of its intentions to crack down on non-financial misconduct. 

Sarah Pritchard, Markets and Executive Director, International at the FCA, made the comments on 17 January 2023 giving evidence at the Treasury Select Committee's "Sexism in the City" Inquiry. 

Pritchard announced to the Inquiry that the FCA intends to improve reporting by collecting data on instances of sexual misconduct from wholesale banks and insurers.  This would include the number of instances as well as the "methods of detection and methods of resolution". According to Pritchard, this would ensure "much better visibility" for the FCA on non-financial misconduct in the industry and should provide insight into the use of non-disclosure agreements where misconduct has taken place. Firms who are subject to the survey can expect to be asked to provide the data imminently as the FCA are "going out with the programme right now". 

Pritchard also echoed the proposals set out in the FCA consultation paper published in September 2023 that non-financial misconduct such as discrimination and harassment "is relevant to fit and proper" when certifying individuals in financial services, bringing non-financial misconduct expressly within the FCA's remit. We looked at these proposals in more detail in our update last year.

What this means for firms

The FCA plans to use the information gathered to take stock and to share best practice, but also - crucially - to inform its supervisory programme when the new rules on non-financial misconduct come into force.   Pritchard said that “the industry are very much asking us to lean in for some regulatory intervention in this space”.

Whilst the FCA hopes to gain better visibility of the use of non-disclosure agreements in cases of non-financial misconduct, it was not currently suggested that the collection of data on the use of non-disclosure agreements will become mandatory as the FCA recognised the are occasions when such agreements may be required to maintain the confidentiality of commercial terms. 

What comes next? 

Firms should note the following timelines for key changes:

1. Following its consultation paper published in September 2023, a policy statement is expected in 2024 with rules coming into force in 2025. 
2. In October 2024, the new duty for employers to take 'reasonable steps' to prevent sexual harassment of their employees will come into force. Our recent blog provides a summary of the key takeaways and in our December update, we take an in-depth look at the steps employers may want to take to prevent sexual harassment.

How we can help 

With extensive experience of advising organisations on equality issues, Burges Salmon can assist employers in preparing for the upcoming changes. If you would like any further information, please contact James Green or another member of our Employment Team.

This article was co-written with Emily Fox.