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Britain’s two best financial regulators have planned to impose stricter rules on diversity and inclusion, in the latest sign that the government’s pressure on guards to support economic growth is forcing a rethinking of many policies.
The Authority of Financial Behavior and the Authority of the Prudential Regulation said on Wednesday that they will not continue with plans demanding from companies to discover more about their diversity and their involvement policies, as these were widely criticized by politicians and businesses.
The move came along with the FCA decision to abandon the controversial proposals to “appoint and shame” more of the regulated firms investigated and the plan of Prime Minister Sir Starmer to remove the UK’s special payments regulator.
It also reflects rapid withdrawal from US enterprises from diversity, equality and inclusion initiatives in the midst of a comprehensive attack by conservatives embedded by Donald Trump’s election as president.
According to the plans described in September 2023 by FCA and that is, which is part of the Bank of England, financial services companies would be required to report more data on staff diversity, including age, ethnicity, gender, religion and sexual orientation.
The heads of the two regulators told MPs on Wednesday that the plans were in response to criticism that they would add a severe reporting of firms and create overlap with government proposals to lecture in the field.
In a letter to Dame Meg Hillier, chairman of the Treasury Committee of the House of Municipalities, the head of Sam Woods wrote: “Many of those who responded to our consultation wanted to approximate our regulatory approach to related initiatives, to avoid duplication and unnecessary costs.
“Given this, we currently do not plan to publish new rules on diversity and inclusion, and we do not intend to return to this question until the essential implementation of any new legislation in this field,” Woods said.
He added that regulators will support volunteer industry initiatives and “will remain alert to group group risks within firms”.
Many financial services companies are already required to report on their gender wage gap, but MPs withdrew against plans to expand the amount of diversity reporting imposed on them.
In his report “Sex and City” last year, the Treasury Committee warned: “These costly initiatives with unclear benefits are likely to be treated by many firms as another compliance with the” Notes Box “, rather than directing a very necessary cultural change.”
Starmer has since called on leadership guards to propose ways to increase economic growth, and told cabinet ministers to control all 130 regulators to see which bodies can be accessed.
FCA chief Nikhil Rathi confirmed in his letter to TSC that the guards were also withdrawing from plans to identify more of the regulated companies he investigates.
Explaining the decision, Rathi said that while he had “set a goal to build a broad consensus after the proposals” and they were supported by the customer and whistles groups, “industry remains mainly against certain aspects”.
The FCA boss told reporters that the double turn of the supervision policy showed that it was important to “listen carefully” and avoid “annoying” rules with legislation.
But Rathi also withdrew against the idea that he was ready for a wider deregistrating car that could leave consumers exposed to fraud and wrong sales. “I wouldn’t want to suggest in any way that we are resigning in any way from our main mandate of consumer protection,” he said.
The withdrawal of regulators was welcomed to the financial sector. Miles Celic, the head of the Thecityuk Trade Association, said: “The FCA decision gives firms and investors greater security and predictability, which is good for the international competition of the United Kingdom and the wider economic growth.”
FCA also said it was delaying plans to introduce rules on non-financial behavior, such as sexual harassment or workplace harassment until June. They had been because of this month.
Rathi said in his letter that the guards were “still committed to this work”, but “the legislative landscape has also changed since we were advised”, so it was “taking some further time to get this right”.
Both regulators added that they were planning to review how the lid removing in bankers’ rewards was affecting gender salary and inequality.
But to allow the time for companies to regulate their pay policies, this job is likely to happen only in the 2026-27 financial year, FCA said.
