The FCA has recently published the results of a comprehensive survey, aimed at understanding how regulated wholesale financial services firms handle non-financial misconduct.
This first-ever extensive data collection effort surveyed 1,028 firms, focusing on incidents recorded between 2021 and 2023. Notably, the survey indicates a concerning upward trend in reported non-financial misconduct incidents over the surveyed years.
The types of misconduct reported vary by sector, but bullying, harassment (26%), and discrimination (23%) emerge as the most commonly reported issues. A significant portion of incidents—41%—were categorized under ‘other’ types of misconduct.
The findings also highlight that 50% of these incidents were identified through reactive measures like grievances, while others were detected through whistleblowing and market surveillance. Interestingly, while disciplinary actions were taken in 43% of cases, other outcomes ranged from unresolved investigations to no action taken despite confirmations of misconduct. The survey also shows a decline in the number of confidentiality and settlement agreements in the banking sector over three years, with no clear trends in other sectors.
The survey revealed that responses to non-financial misconduct rarely led to adjustments in remuneration, primarily affecting unvested variable pay. Moreover, essential policies such as whistleblowing and disciplinary measures were absent in some firms.
The FCA aims to use this survey to facilitate industry-wide improvements by allowing financial boards to benchmark their firm’s practices and encouraging discussions at senior management levels. The goal is to ensure firms are fully compliant with regulatory responsibilities, with the FCA ready to act against non-compliance.
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