Bullying and harassment cases rise at City firms, FCA finds

There has been a sharp rise in non-financial misconduct at firms, according to a survey by the City regulator, but strikingly, the data revealed these companies took no action in more than half of investigations.

The Financial Conduct Authority (FCA) hailed its survey of more than 1,000 companies as a “significant step” to understand the scope of the issue and help firms benchmark themselves against peers.

Between 2021 and 2023, reports among surveyed UK wholesale banks, brokers, insurers and market intermediaries rose from 1,363 to 2,347.

Reports jumped 41 per cent to 2,347 in 2023, from 1,670 in 2022 – when employees returned to the office after Covid-19.

The survey, conducted among 1,028 firms in February, found bullying and harassment alongside discrimination were the most recorded concerns over the three years – making up 26 per cent and 23 per cent of reports, respectively.

Complaints classified as “other” made up 41 per cent of the total, raising questions over the findings.

These cases included everything from intoxication, offensive language and data protection breaches to bringing pets into work and misusing gifts and hospitality, which could also be considered financial misconduct.

The FCA noted that a high number of complaints could indicate a healthy corporate culture where employees feel they can speak up. Equally, it could suggest problems within the industry.

Despite that, financial firms took disciplinary or other action against staff in 43 per cent of cases. The rest were either not investigated, unable to conclude, not upheld, upheld with no other action or are still being reviewed.

Over the three years, 62 per cent of reported discrimination incidents and 47 per cent of bullying and harassment cases were not upheld by the companies surveyed.

Firms took action in 73 per cent of violence or intimidation reports and 64 per cent of sexual harassment cases.

By sector, wholesale banks had the highest proportion of cases where no disciplinary action was taken. Of these complaints, 45 per cent were not upheld, and a further 7 per cent of investigations were unable to conclude.

The FCA added that not all the firms it surveyed had whistleblowing and disciplinary policies in place.

“We want this data to support financial firms by providing their management teams and boards with an opportunity to consider if they stand out, and, if so, why that might be,” said Sarah Pritchard, the FCA’s executive director for markets and international.

“The data requires context and careful interpretation. But in being transparent we hope financial firms can benchmark themselves against their peers.”

There were 7.9 reported incidents per 1,000 employees at wholesale banks last year, compared to 6.1 for both brokers and insurers, and five for market intermediaries.

Sexism in the City

While the wholesale banks had the lowest proportion of sexual harassment reports over the three years, they had a greater share of discrimination complaints than the other sectors.

London market intermediaries had the highest relative proportion of reported incidents of violence or intimidation.

The London market insurers, including Lloyd’s managing agents, saw a sharp rise in reports – from 102 in 2021 to 239 in 2023.

Lloyd’s of London has been trying to clean up its culture after a damning Bloomberg report in 2019 highlighted a male-dominated workforce and excessive drinking culture that had sexual harassment at its core.

In March, the Treasury Select Committee concluded an inquiry into ‘Sexism in the City’ that called for urgent government action to root out sexual harassment, misogyny and gender imbalance across the financial sector, criticising slow industry-led efforts.

The investigation was partly prompted by sexual harassment allegations against hedge fund boss Crispin Odey, who it emerged on Thursday had rejoined his eponymous firm.

Labour MP Meg Hillier, who became the committee’s new chair last month, said the FCA’s latest findings “seem to show that far from the City dealing with these issues, it may even be going backwards”.

She added that the committee would seek “further clarity” from the regulator, including how far the data reflects changes in how how firms report cases.

NDA usage

The total number of confidentiality and settlement agreements signed by complainants fell over the three years, according to data heavily influenced by wholesale banks.

In 2021, complainants signed 126 settlement and 87 confidentiality agreements, which dropped to 101 and 51 respectively in 2023.

The Treasury Committee had called for a legislative ban on the use of non-disclosure agreements (NDAs) in harassment cases as part of its inquiry – a recommendation the Conservative government rejected in May.

Discrimination was the most common type of case where the complainant signed either a settlement or confidentiality agreement.

Confidentiality agreements cannot be used to prevent public interest disclosures to the FCA.

Yvonne Braun, executive sponsor for diversity, equity and inclusion (DEI) at the Association of British Insurers, said the report “sends a stark reminder of just how far we still have to go to stamp out such unacceptable behaviour”.

“While the FCA’s survey only covers a subset of our members, it demonstrates that more firms need to put in place a DEI strategy and speak-up policy, and our blueprint is there to help guide ABI members and others across the financial services sector,” she added.

A spokesperson for banking trade body UK Finance commented: “The FCA’s survey highlights the importance of workplace culture, and a key part of this is ensuring people feel able to speak up about behaviour that falls below expected standards.

“Based on today’s report, firms will review and, as required, enhance the approach being taken to dealing with misconduct.”