The Financial Conduct Authority (FCA) published its findings on non-financial misconduct at the end of October
One encouraging finding was an apparently low number of settlement and confidentiality agreements signed by complainants in the London insurance market – with 27 settlement agreements and 7 confidentiality agreements signed in 2023.
While there can be legitimate uses for these agreements, the Equality and Human Rights Commission - among other institutions - has raised concerns about them, saying they ‘can prevent workers from speaking about their experiences, create confusion as to what they can and cannot say, and make them fearful about what will happen if they do speak up.’
More generally, the FCA has expressed concern about governance, particularly among larger firms with more than 250 employees.
44% of London market insurers and 26% of London market intermediaries stated that a board level committee did not receive management information about non-financial misconduct, and 37% of London market insurers and 39% of London market brokers stated that they have no formal governance structure or committee that decides the outcomes and disciplinary actions for those involved in non-financial misconduct cases.
Clearly, formal procedures at a senior level can have disadvantages as well as advantages. However, for staff dealing with issues around harassment, bullying and non-financial misconduct, the image portrayed by a lack of structure can be significant. It can suggest that a firm regards these issues as less important than other issues that are governed at a senior level, such as financial reporting or remuneration. A lack of formality can also send an unintentional message that firms would like problems around financial misconduct to go away, rather than being addressed thoroughly.
The FCA chose to express explicit concerns about these results, in contrast to a more neutral approach to much of the data, saying, ‘…the responses to questions about board MI and governance structures suggest that large firms’ governance and oversight of non-financial misconduct could be falling short of our expectations for the size, nature and complexity of the firms’ businesses.’
Given the importance of these issues to the wellbeing of both staff and the wider profession, sending a clear message through more formal processes would be a proportionate and meaningful contribution to culture change.
