| Link(s): | FCA publishes results of non-financial misconduct survey | FCA Culture and non-financial misconduct survey – findings | FCA Survey questions: culture and non-financial misconduct |
Context
The FCA has published the findings from its survey of the London insurance markets and London wholesale banking firms, in relation to culture and non-financial misconduct. Alongside the press release and the finding, the FCA has published the non-financial misconduct survey questions (a total of 77 that firms may have been required to complete, over 19 pages).
The survey of 1,028 regulated wholesale financial services firms (investment banks, brokers and wholesale insurance firms) asking about recorded incidents of non-financial misconduct in 2021, 2022 and 2023, found that the number of allegations reported increased between 2021 and 2023. It was interesting to note that the wholesale banking sector was the only one of the four sectors surveyed that showed a 100% return of the survey. Firms in the other three sectors (all insurance) showed less than a 100% return.
When the survey launched, the FCA was clear 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 3 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.
Key points to note and next actions
From the survey responses the FCA found the following.
- The number of reported non-financial misconduct incidents increased over the 3 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.
- 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 3 years surveyed according to the data from the wholesale banks sector. The data from other (insurance) 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.
- The FCA observed some differences between sectors and between firm sizes.