The FCA and the PRA have decided to abandon their proposed plans to introduce new rules aimed at enhancing diversity and inclusion within the financial services sector.
This decision marks a significant shift from their earlier position announced in September 2023, where they had launched a consultation to set up a new regulatory framework for Diversity and Inclusion (D&I), claims ESG Today.
Initially, the proposals by the FCA and PRA included mandates for firms to develop comprehensive D&I strategies, which would outline clear objectives and methods for achieving these goals.
Furthermore, it was suggested that boards should take responsibility for maintaining and overseeing these strategies. However, following a period of feedback from industry stakeholders, both regulators have now stepped back from these plans.
The feedback highlighted concerns over the potential for regulatory duplication and the added costs that new rules might impose on firms. It also aligned with the Treasury Select Committee’s recommendation to avoid proceeding with the plan’s data collection proposals.
Despite acknowledging the benefits of diversity and inclusion, such as improved governance, decision-making, and risk management, as well as boosting long-term competitiveness in the industry, both the FCA and PRA concluded that they will not proceed with publishing new rules on this matter.
This decision comes at a time when similar policies and regulations are being rolled back in the U.S., especially after a Supreme Court ruling against race-based criteria in college admissions and subsequent moves by the Trump administration to eliminate DEI preferencing in federal contracting.
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