Plans by Britain’s financial regulator to require firms to set targets for improving diversity could be counterproductive, UK business and women minister Kemi Badenoch said on Thursday.
The Financial Conduct Authority (FCA) and the Bank of England’s Prudential Regulation Authority (PRA) last September proposed guidance for financial firms to tackle sexual harassment and bullying, along with new requirements for large banks and insurers to set targets to improve diversity and inclusion.
“My role as minister for women and equalities in particular often involves the killing of bad idea,” Badenoch told a conference held by TheCityUK, a financial industry body.
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“Sometimes it means doing things like writing to the FCA and PRA, as I did a few weeks ago, warning them against a proposed mandate on equality quotas,” she added.
Such a requirement is something the “law does not require and could be counterproductive,” she said.
The FCA said: “We have received the letter and we’ll respond.”
Last month, parliament’s Treasury Select Committee said in its report on “Sexism in the City” that regulators should drop their “prescriptive plans for extensive data reporting and target setting.”
Instead, regulators should focus their efforts on ensuring that the boards and senior leadership of firms take greater responsibility for improving diversity and inclusion, the lawmakers said.
The FCA told the committee last month it would reflect on the range of views received on setting diversity targets.
Badenoch told the conference she believed in the “social value” of financial services as it brings investment and makes people’s lives better.
“Regulation has moved from protection against fraud and systemic failure to everything from diversity to green finance. This ever-rising tide of micromanagement will not necessarily make us or the financial market stronger,” she said.
TheCityUK published a report on Thursday calling for closer scrutiny of regulators to ensure they aid the financial sector’s global competitiveness and UK economic growth in their work.
(Reporting by Huw Jones; editing by Barbara Lewis)
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