Harness D&I to capitalise on innovation (and comply with our rules): FCA

FCA Chief Executive Nikhil Rathi continues to put diversity and inclusion front-and-centre.

In his recent speech to CISI he highlighted key priorities for UK financial services to thrive over the next 30 years.  One of these is diversity and inclusion, in his view for two main reasons.

First, D&I must be fully harnessed to "capitalise on innovation".

Second, firms that do not "embrace diversity of thought" will struggle to:

• "Serve the needs of a diverse customer base" (this has obvious connections to the proposed Consumer Duty).
• "Manage conduct risk effectively" (and there are clear links here with whistleblowing requirements and SMCR responsibilities, as well as to the 'G' in ESG).

It's welcome to have such a clear articulation from Rathi of the business and regulatory rationale for D&I.

And it's not just talk.  D&I is a key regulatory focus area for the FCA.

Rathi's speech comes hot on the heels of final FCA rules seeking to boost diversity transparency for boards and executive managers of listed companies.  

And following 2021's FCA/PRA/BoE joint discussion paper on D&I, we expect those regulators imminently to start a joint consultation on new rules, with finalised rules expected towards the end of 2022.

It's going to be a busy year.