The Financial Conduct Authority (FCA) has published the results from a survey of over 1,000 financial firms, revealing a rise in reports of non-financial misconduct between 2021 and 2023 – and the insurance sector, in particular, has fallen under the spotlight.
The survey aimed to understand how investment banks, brokers, and wholesale insurance companies handle allegations of misconduct such as bullying, harassment, and discrimination.
Data shows that bullying and harassment accounted for 26% of reports, while discrimination made up 23%. A substantial 41% of reports fell into an “other” category, demonstrating the complexity and variety of issues affecting workplace environments. Overall, City firms reported a 72% surge in non-financial misconduct complaints across the last three years.
The insurance industry, sadly, is no stranger to issues around sexual harassment and bullying, with the Lloyd’s market in particular coming under fire. It has spent several years trying to stamp out issues and unveiled lifetime bans for inappropriate conduct as part of its campaign efforts back in 2019.
Still, London’s insurers had the highest proportion of harassment and bullying claims. Complaints varied from pets being brought into work, to more serious issues such as alcohol-fuelled behaviour. Overall, London’s insurance brokerages within the Lloyd’s market, which reported the highest levels of violence and intimidation, faced the most disciplinary action.
Other findings included that the number of settlements and confidentiality agreements had declined. In addition, it was noted that 4% of regulated firms did not complete the survey. Officials also plan to follow-up with firms that reported zero incidents — it was noted that 16% of the largest London market insurers reported no incidents from 2021 to 2023.
The FCA emphasised that the increase in reported cases could be interpreted in different ways, with the possibility that a high reporting rate might indicate that employees feel more empowered to report misconduct. On the contrary, a low reporting rate might suggest a culture where such issues remain unreported.
The report also found that firms are using a variety of methods to detect misconduct, with internal systems, formal processes, and whistleblowing being the most common. The findings are intended to help firms benchmark their own reporting mechanisms against industry standards.
The FCA stated that it will continue to work with trade associations to coordinate industry-wide analysis and actions to improve workplace culture. The data may also be useful for other sectors beyond financial services that are interested in addressing workplace misconduct.
Sarah Pritchard, executive director of markets and international at the FCA, noted the importance of the data in helping firms reflect on their internal practices. “We want this data to provide firms with the opportunity to evaluate their own cultures and processes,” she said. “A healthy workplace culture is critical across the financial services we regulate, and where non-financial misconduct is ignored, it creates a culture that can enable wrongdoing.”
Sheila Cameron, CEO of the Lloyd’s Market Association (LMA), voiced support for the FCA’s initiative, stating that the survey represents “a valuable snapshot of how financial service companies are dealing with critical issues around culture, diversity, equity and inclusion.” She acknowledged that cultural change is a journey, noting a 10% reduction in observed poor behaviour in the Lloyd’s market over the last year.
On the subject of the Lloyd’s market, Lloyd’s CEO John Neal welcomed “the increased focus in this important area.”
“Since 2019, Lloyd’s has maintained a critical focus on supporting an inclusive and high performing culture across the Corporation and market and will remain one of our top strategic priorities,” he said. “While we are encouraged by the progress seen, now is the time to double down on our commitment and efforts to get to where we need to be. This means maintaining the focus we’ve placed on culture in recent years to continue transforming Lloyd’s for the better, while attracting the talent that is so vital to the success of our market.”
Similarly, Matthew Hill, chief executive of the Chartered Insurance Institute (CII), described the survey results as making “for uncomfortable reading, but equally highlight an opportunity for our professions to make a real difference.” He emphasised that the CII will reinforce its Code of Ethics to ensure members adhere to high standards of behaviour and contribute to a culture where all professionals can thrive.
Chris Croft, CEO of the London & International Insurance Brokers’ Association (LIIBA), also welcomed the survey as a valuable tool for smaller firms to benchmark against their peers. He pointed out that 80% of LIIBA’s members are small firms, often lacking robust HR resources, and that the survey would guide improvements in misconduct handling and culture-building. “Positive cultures deliver good business outcomes and we want to help our members achieve that,” he noted.
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