Matthew Connell defends regulator’s approach to diversity and inclusion

“I think that the FCA sees the real heart of inclusivity and diversity.”

Those were the words of Chartered Insurance Institute (CII) policy and public affairs director Dr Matthew Connell (pictured) during the recent “Crafting EDI Strategies in an Evolving Regulatory Landscape” webinar by the CII and the Association of British Insurers (ABI).

Defending the Financial Conduct Authority, Connell said: “The regulation aspect of [equality, diversity, and inclusion] is focussed almost exclusively on things that only the regulator can do, and the most important element is what’s happening in the market in terms of culture and practice on a day-to-day basis, and I think there’s several reasons for this.

“I think sometimes the FCA gets criticised for rules not being prescriptive enough, or comprehensive enough, but I think there is an awareness, with the regulators and particularly with the FCA, that this is very much a developing situation. There’s a huge amount of test-and-learn that’s going on in terms of balancing out not just the needs of different protected groups, but also issues around intersectionality and how being a member of more than one protected group might change people’s circumstances.”

In Connell’s view, a look at the wider statements – including on vulnerability – being made by the regulator is necessary to understand where it is coming from.

“I think that the FCA sees the real heart of inclusivity and diversity, and how that can make a real difference for consumers and people working in financial services,” he stated. “In 2022, for example, the FCA had a policy statement on the Consumer Duty where it says ‘diversity is a lens that can help firms to better understand and meet the needs of their customers, including those in vulnerable circumstances’.

“We see significant practical benefits in firms exploring customer’s needs from different perspectives. And so, I think that's really the encouragement in the Consumer Duty towards a culture of curiosity and learning, and applying specific solutions for specific consumers, especially through the lens of vulnerability, is at the heart of what the FDA is doing.

“So, if we only look at the rules the FCA is proposing, and not at the cultural change that they’re challenging us to make, I think that means that we as a profession would be missing out on something very fundamental, and it would invite, actually, the wrong kind of regulation, which is following up with more and more waves of prescriptive regulation that tends to be more one-size-fits-all.”

What do you think about this story? Share your thoughts in the comments below.