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September 1, 2023
Jill Hambley, MD of ICS, discusses the need for all businesses to review their approach to diversity, equality and inclusion.
September 2023 has been a busy month for the diversity, equality and inclusion discussion. We have seen the publication of the long awaited FCA consultation paper CP23/20 Diversity and inclusion in the financial sector – working together to drive change. Prior to that Browne Jacobson and the University of Nottingham, with support from BIBA, published a detailed report ‘Transforming EDI practices in UK insurance’ following a survey that they undertook.
This month also sees the annual ‘Dive-in’ festival, one of the world’s largest diversity, equity, and inclusion events, and the Women in Work Summit, advocating how to prioritise and implement women’s health policies that keep women in work and drive competitive advantage.
So there is a lot to talk about, but then there always has been. Despite all the ‘talk’ progress still seems to be slow. A key headline from the University of Nottingham research is that ‘Participants report mixed views on the effectiveness of firms’ EDI programmes and strategies. A significant portion had reservations about the strength of organisational commitment to EDI initiatives.’ Also ‘More than half of women participants and participants from UK ethnic minority backgrounds other than white report that their career progression has been held back because of their gender or race, respectively.
The FCA consultation paper proposes to better integrate non-financial misconduct into all firms through:
- Staff fitness and propriety assessments
- Conduct Rules Suitability criteria for firms to operate in the financial sector (Threshold Conditions)
Larger firms (with more than 250 members of staff) will be required to:
- report their average number of employees to the FCA on an annual basis
- collect, report and disclose certain D&I data
- establish, implement and maintain a D&I strategy
- determine and set appropriate diversity targets
- recognise a lack of D&I as a non-financial risk
But will additional rules make a difference? Its fair to say that since regulation of insurance commenced in 2005, firms have upped their game with regard to compliance and we definitely have experienced that in our 20+ years of consulting with intermediaries. However, we still observe firms making commercial decisions (taking on ARs/IARs, wholesaling a product or scheme, selling a new product line) where the regulatory consequences are not considered until far down the line. This ‘after-thought’ approach also applies to diversity and inclusion for a significant number of firms and relies on staff advising management on a case by case basis if any issues occur.
I commented recently elsewhere on the need for firms to think through what rewards it provides to staff, suggesting that a night out at the pub is not necessarily inclusive depending on the age, race and religion of staff.
We have all worked in businesses where the owners thought staff should be ‘grateful’ to have a job. There was little, if any, recognition of staff as individuals with families, and personal lives that got a bit messy from time to time. And don’t even think of trying to explain those messy times to your line manager in the hope of any flexibility in how you did your job. Covid has meant that a lot of firms introduced flexible working which has revolutionised the lives of people with caring responsibilities yet the press is full of articles of firms who are now looking to reverse these.
In the current climate, where attracting and retaining good quality individuals is a challenge, there’s a commercial reason to be inclusive as well as it just being the right thing to do. This article on the EW Group’s website illustrates some of the key benefits of having a diverse and inclusive work place. But it does require the commitment and input of a broad range of staff at all levels in the business. I am not visually impaired so cannot imagine all the considerations needed for someone who is. But I bet I will have colleagues with family or friends that have more knowledge to draw from.
Inclusion, like many other considerations in running a thriving business, should come from the top down but include representatives from throughout the business. HR departments can eventually own the policies but successful managers recognise that they don’t know everything and need to draw on the experience of others.
So whilst the FCA may be applying more detailed rules to the larger firms the expectation is that all firms will look to make progress in developing policies and procedures that demonstrate their commitment to diversity, equality and inclusion. Firms could begin with a DE&I Policy and add to this with detailed policies addressing recruitment, selection, bullying & harassment, mental health, menopause etc. Managers will also need to be trained in how to use these policies.
Once the outcome of the FCA consultation is known and regulated businesses need to consider how to adapt, Insurance Compliance Services will support it’s clients in demonstrating compliance. If you would like to discuss your existing support needs please email us at or telephone 01892 539600.
