The FCA has published the results of a survey to better understand how firms record and manage allegations of non-financial misconduct.
The survey of over 1,000 investment banks, brokers and wholesale insurance firms found that the number of allegations reported increased between 2021 and 2023.
When the survey launched, the FCA explained that it was likely that data could be read in different ways. For example, a high number of complaints could be an indicator of a healthy culture in which people feel they can speak up, confident they will be listened to. A low reporting rate may indicate the opposite.
In the three years covered by the survey, bullying and harassment (26%) and discrimination (23%) were the most recorded concerns. However, the large ‘other’ group of concerns (41%) indicates how difficult it can be to categorise issues of personal misconduct.
The FCA found that firms identified concerns through a variety of mechanisms. Some firms were using their internal systems to identify potential issues, although formal processes and whistleblowing were the most prevalent methods of detection.
The findings are being shared to enable firms to benchmark their own reporting against this peer analysis and consider if their processes for reporting and investigating possible non-financial misconduct remain appropriate.
Sarah Pritchard, executive director of markets and international, said: “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. The data requires context and careful interpretation. But, in being transparent, we hope financial firms can benchmark themselves against their peers.
“Healthy workplace cultures are essential across all the markets we regulate – where non-financial misconduct is allowed to persist it can undermine trust and confidence, and create a culture where wrongdoing goes unchallenged, causing harm.
“We are grateful to see a number of trade bodies engaging with these findings. We look forward to continuing to partner with them to continue to raise standards.”
Key findings from the survey:
- The number of reported non-financial misconduct incidents increased over the three years surveyed.
- The distribution of non-financial misconduct types varied by sector, although bullying and harassment (26%) and discrimination (23%) were the most reported types of non-financial misconduct across all sectors. There were also 41% of non-financial misconduct incidents reported in the ‘other’ category.
- Firms identified incidents through reactive routes such as grievances or similar formal processes (50%) and through alternative reporting routes such as whistleblowing. Firms also identified incidents through firm-led detection methods such as market surveillance. In the survey, firms could report multiple detection methods for 1 incident.
- Disciplinary or ‘other’ actions were taken in 43% of cases. In the remainder, there was a range of other outcomes – either the cases were not investigated or unable to conclude, not upheld, upheld with no other action, or investigations were ongoing.
- Some types of reported non-financial misconduct, such as violence and intimidation, more often resulted in disciplinary actions compared to other types, such as discrimination.
- The total number of confidentiality and settlement agreements signed by complainants fell over the three years surveyed according to the data from the wholesale banks sector. The data from other sectors showed no clear trend.
- Discrimination, with 23% of cases on average across all sectors, had the highest percentage of incidents resulting in the complainant signing either a settlement or confidentiality agreement.
- In all sectors, action taken following non-financial misconduct rarely resulted in remuneration adjustment. When remuneration was adjusted it was mostly against unvested variable pay.
- Some relevant policies, like whistleblowing and disciplinary policies, were not in place at all firms surveyed.
