The Chartered Insurance Institute has advised the Financial Conduct Authority against a ‘one size fits all’ approach to equality, diversity and inclusion regulation.
In a recent webinar run by the CII in collaboration with the Association of British Insurers, Matthew Connell, director of policy and public affairs at the CII, addressed criticism faced by the FCA on the topic of regulation within the EDI space.
He said: “The regulation aspect of [EDI] is focused almost exclusively on things that only the regulator can do, and the most important element is what's happening in the market in terms of culture and practice on a day-to-day basis, and I think there's several reasons for this.
“Sometimes the FCA gets criticised for rules not being prescriptive enough, or comprehensive enough, but I think there is an awareness, with the regulators and particularly with the FCA, that this is very much a developing situation.
“There’s a huge amount of test-and-learn that's going on in terms of balancing out not just the needs of different protected groups, but also issues around intersectionality and how being a member of more than one protected group might change people's circumstances.”
To understand where the FCA is coming from, Connell said the industry needed to look at the wider statements the regulator made, not just about EDI, but also vulnerability.
“The FCA sees the real heart of inclusivity and diversity, and how that can make a real difference for consumers and people working in financial services.
"In 2022, for example, the FCA had a policy statement on the consumer duty where it said ‘diversity is a lens that can help firms to better understand and meet the needs of their customers, including those in vulnerable circumstances’. We see significant practical benefits in firms exploring customer’s needs from different perspectives.
“And so, that's really the encouragement in the consumer duty towards a culture of curiosity and learning, and applying specific solutions for specific consumers, especially through the lens of vulnerability, is at the heart of what the FDA is doing.
“So, if we only look at the rules the FCA is proposing, and not at the cultural change that they're challenging us to make, I think that means that we as a profession would be missing out on something very fundamental, and it would invite, actually, the wrong kind of regulation, which is following up with more and more waves of prescriptive regulation that tends to be more one-size-fits-all,” he added.
Connell also discussed the Treasury’s Sexism in the City report and said the committee “missed the point” to some extent about what the FCA was doing when it said it didn't see the point of the FCA’s data collection requirements, and that these requirements could be a tick box exercise that was duplicating work that's already being done.
He explained: “Perhaps the committee missed the point that what the FCA is offering as a regulator is consistency of reporting and adoption of common standards, which I think is a very powerful element.
