Earlier this year, there was a significant increase in the number of allegations of sexual harassment reported to the Financial Conduct Authority compared to the previous year.
This increase in allegations may have been triggered by a surge of employees returning to work in the office post-pandemic and is indicative of a serious underlying issue within the financial sector.
In light of these allegations, the Treasury Committee launched an inquiry into "sexism in the City", with a focus on examining the barriers faced by women in financial services, particularly in London.
During its first oral evidence hearing, Baroness Helena Morrissey, chair of the Diversity Project, testified as a key witness.
Morrissey emphasised that a major barrier faced by women is workplace culture, warning that the industry operates as an "old boys’ network", in which men and women have vastly different perceptions on how they view the workplace.
Another witness, Mark Freed, stated that the lack of diversity within the financial sector leads to male-centred workplaces that demonstrate a lack of inclusivity towards women.
This lack of inclusivity results in women being subjected to bullying in the form of micro-aggressions, which undermines their sense of safety and respect in the workplace. If left unchecked, these issues can escalate into more severe issues, such as misogyny and sexual misconduct.
What role should the FCA play in diminishing misconduct?
During the hearing, Morrissey discussed the recent consultation paper published by the FCA titled "Diversity and Inclusion in the Financial Sector".
The aim of the paper was to address the lacking diversity and inclusion within the industry, as well as touching on the issues of groupthink and toxic work culture that contribute to increased misconduct.
The paper suggested that there was strong support for the inclusion of non-financial misconduct, such as bullying and harassment, into the current fitness and propriety assessments, as well as the FCA conduct rules.
The FCA acknowledged the psychological damage that these issues can have on victims, as well as implications for the wider firm.
It proposed adding a guidance to the conduct rules, explicitly outlining what type of behaviour would amount to a breach, emphasising that "only serious misconduct" would qualify, and factors such as the duration of the conduct and whether the perpetrator is a repeat offender would be considered when issuing sanctions.
Morrissey expressed concerns about the lack of the clear definition and scope of serious misconduct, suggesting that the FCA is "erring on the side of caution".
Morrissey was also concerned with the lack of preventative action taken by City firms, and urged the FCA to strengthen the severity of its disciplinary sanctions in order to deter misconduct from taking place by ensuring that it could have "career-ending" consequences.
What issues are currently preventing action?
The committee heard evidence in relation to the issues that are impeding change. One key commonality that was found in witness testimonies was the presence of a ‘fear factor’, preventing both victims and witnesses from speaking out about bullying and harassment due to fears of disbelief or reputational/career repercussions.
