by Genevieve Stow (pictured right), director of outreach and sponsorship, Global ISC Group
The regulation of non-financial misconduct is a relatively recent development, introduced at the start of this year in response to several high-profile incidents that underscored the need for stricter controls. These incidents exposed pervasive issues such as harassment, bullying, discrimination, and other unethical behaviours, prompting a shift in how the re/insurance sector and other industries address misconduct.
The UK Financial Conduct Authority (FCA) has introduced new proposals aimed at giving non-financial misconduct (NFM) a clearer regulatory foundation. It recently released a consultation paper outlining plans to better incorporate non-financial misconduct into assessments of fitness and propriety (F&P), conduct rules, and the criteria for firms to meet 'threshold conditions' to operate in the financial sector. These proposals expand on the FCA's previous statements and publications, underscoring its growing emphasis on this issue.
Non-financial misconduct presents a critical risk to the re/insurance industry. The behaviours which fall under the heading of ‘non-financial misconduct’ not only damage internal company dynamics but also pose a systemic threat to businesses. Unlike financial misconduct, which often receives more public attention, non-financial misconduct can silently erode workplace culture, impact profitability, and increase regulatory scrutiny. Furthermore, as with any new regulation introduced, it can often be challenging for organisations to address it effectively, a challenge which will be even more pervasive when tackling something intangible like company culture.
In the insurance sector, people are the primary asset and the biggest risk. The demand for skilled professionals is higher than ever, yet instances of non-financial misconduct contribute to an environment that can drive talented individuals away. When a company's culture is marred by unethical behaviours that go unreported or unaddressed, it not only impairs employee morale but also jeopardises retention. As a result, companies face increased turnover, higher recruitment costs, and lost productivity.
Women, in particular, can be disproportionately affected by these issues. Non-financial misconduct frequently manifests as gender-based discrimination or harassment, creating a hostile work environment that can hinder women’s career progression and contribute to high turnover rates. Given the sector’s need to reach gender targets at senior leadership, the loss of skilled female employees through non-financial misconduct presents a serious business issue as well as a cultural issue.
According to research completed by Browne Jacobson in 2023, 47% of respondents were unclear on the outcome of their report of an EDI issue and only 14% were satisfactory with the outcome. These numbers highlight a failing from companies in facilitating robust reporting and follow through on complaints that can be linked to non-financial misconduct. Alternative Dispute Resolution (ADR) offers an efficient approach to addressing these complex issues. ISC member Rebekah Ratliff contributed: “Services like mediation and arbitration, provided by intermediaries such as JAMS (Judicial Arbitration and Mediation Service), can facilitate safe, confidential discussions that help companies address grievances without public litigation.” ADR provides a platform for employees, particularly women and other vulnerable groups, to seek justice while organisations reassess institutional practices and promote accountability.
ISC Group plays a critical role in advancing gender equity in the re/insurance sector, focusing on accelerating women into leadership roles. With a 20-year legacy and a global network of over 10,000 members and 100 business partners, we are committed to fostering a fairer workplace by promoting greater gender representation at all levels of business. As a leading global business network, we actively seek to bring about lasting, meaningful change by collaborating with government and industry leaders.
At ISC Group, we’re dedicated to continuing our work as a catalyst for industry-wide cultural transformation, focusing on cultivating a business environment that actively dismantles barriers and biases. Our aim is to create sustainable cultural change in the re/insurance sector by advancing women into leadership and fostering greater gender equity. Recognising non-financial misconduct is key to dismantling the barriers women face. The provision of trusted and effective avenues for reporting and weeding out noxious behaviours is intrinsic to ensuring that diverse talent can thrive in the workplace. Through our advocacy and partnerships, we continue unravelling limitations, ensuring that all women have equal opportunities to excel within the industry. This work is essential to transforming the workplace into a more inclusive and supportive environment where colleagues and businesses can reach their potential.
As the re/insurance industry evolves, addressing non-financial misconduct must be a priority. By creating safer work environments and fostering a culture of accountability, the industry can not only reduce risks but also promote fair treatment for all employees. For women, this shift represents a crucial opportunity to build a more inclusive and supportive professional landscape that values their contributions and upholds their rights. Addressing non-financial misconduct is about more than just mitigating risks, it’s about ensuring the re/insurance sector thrives as a responsible and sustainable industry for everyone.
