The UK Financial Conduct Authority (FCA) has decided not to move forward with proposed changes to how it publicises investigations into regulated firms and will also abandon plans to introduce diversity and inclusion (D&I) reporting requirements.
The regulator considered replacing the current "exceptional circumstances test" for disclosing investigations with a "public interest test". However, FCA chief executive Nikhil Rathi (pictured above) informed lawmakers that a lack of consensus among stakeholders led to the decision to maintain the existing approach.
Consumer groups supported the proposed transparency measures, while industry trade associations expressed concerns about the potential impact on firms under investigation.
Rathi said that the FCA had sought to build broad agreement on its enforcement transparency proposals but noted that significant concerns remained over the proposed changes. As a result, the regulator will continue to publicise investigations only in exceptional circumstances.
The decision was welcomed by the Association of British Insurers (ABI) and the Lloyd’s Market Association (LMA), which had raised concerns about the potential impact of publicising investigations.
ABI director general Hannah Gurga reiterated that the proposed changes could have affected consumers, firms, and the UK’s regulatory framework. She said the FCA’s decision to maintain its current process, with limited additional powers, was in line with the association’s position.
While not officially linked, the rollback of certain D&I initiatives may be seen by many as related to the changing climate in the US following the inauguration of President Donald Trump.
One of President Trump’s initial actions upon stepping into office was signing Executive Order 14168, titled "Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government", which effectively withdrew federal recognition for transgender individuals and aimed to eliminate diversity, equity, and inclusion (DEI) programs within the federal government.
The rollback of D&I initiatives has raised apprehension among professionals in the City of London. A report from FM London revealed that women and minority groups fear that the reduction in D&I efforts could stall progress toward a more inclusive workplace.
Despite some firms reaffirming their commitment to DEI, there is scepticism about the long-term impact of these initiatives within the finance and banking sectors.
The LMA supported the decision to drop the FCA’s publication rule changes. However, LMA chief executive Sheila Cameron expressed disappointment over the regulator’s decision to step back from D&I data reporting.
In 2023, the FCA and the Prudential Regulation Authority (PRA) put forward proposals aimed at improving D&I within regulated firms, including new data collection requirements. Rathi said diversity initiatives could contribute to better governance, decision-making, and risk management.
However, a parliamentary committee advised against the regulator’s involvement in mandatory data collection.
Rathi told lawmakers that many consultation respondents preferred alignment with existing government initiatives on employment rights, gender action plans, and pay gap reporting, rather than additional regulatory measures. The FCA acknowledged concerns about duplication and compliance costs, leading to the decision to drop its D&I reporting proposals.
Despite this, the FCA said it would continue to support voluntary industry-led D&I efforts. Cameron said that inclusion remains a core principle for the LMA and is key to the market’s future.
She highlighted that LMA insurers have been submitting D&I data to Lloyd’s since 2020, with Lloyd’s formalising D&I reporting requirements in 2022.
Cameron noted that data collection has helped monitor progress against Lloyd’s targets, particularly in areas such as senior leadership diversity. According to LMA data, the proportion of women in leadership roles has increased from 29% in 2021 to 36% in 2024.
What are your thoughts on this story? Please feel free to share your comments below.
