FCA investigates sexual harassment, bullying and the use of hush-hush NDA.
The UK’s FCA is gearing up to grill banks, insurers, and brokers on the level of sexual harassment and bullying complaints in their workplaces and whether they have used non-disclosure agreements to hush up grievances.
Sarah Pritchard, the Financial Conduct Authority’s executive director for markets and international, told MPs on Wednesday that the regulator was intensifying efforts to tackle non-financial misconduct across the City.
The FCA aims to finish its investigation by the summer, but it is not clear if or when the findings will be made public.
The FCA has confirmed that city firms will be probed on how they deal with reports of workplace sexual harassment and bullying, including the use of NDAs, after the limited progress of industry-led efforts.
Sarah Pritchard, markets boss at the Financial Conduct Authority (FCA), told the Treasury Committee on Wednesday that the regulator would crack down on non-financial misconduct in the Square Mile. She gave evidence to the committee’s Sexism in the City enquiry. She evaluated the impact of the Treasury’s Women in Finance Charter, which asks financial services firms to commit to gender balance.
Pritchard told MPs that
- The FCA’s new probe comes after a “steady increase in the number of reports coming through to our whistleblowing line” in recent months,
- Non-financial misconduct has received increased attention after a series of allegations against hedge fund founder Crispin Odey and officials at The Confederation of British Industry.
- The regulator would ask banks, insurers and brokers for data on workplace non-financial misconduct complaints and evaluate “methods of detection and resolution”.
Pritchard flagged the potential use of NDAs to deal with misconduct but noted that there could be
- “There are a number of valid reasons why an entity might use a non-disclosure agreement to keep confidential the commercial terms of a settlement. "
FCA chief executive Nikhil Rathi, who also gave evidence on Wednesday, added that
- “There could be a case for looking at” requesting data on the use of gagging clauses.
Lorraine Johnston, a partner at global law firm Ashurst, said:
- “The FCA is concerned that its existing rules aren’t working as expected and are using their powers to analyse these information requests further.
- “While the next steps may be further scrutiny at individual firms, it is more likely that the FCA will consider what changes are needed to the rules themselves and what wider effect that should have across the industry.”
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