(Bloomberg) -- City firms reported a 72% surge in non-financial misconduct complaints over the last three years following a string of high-profile scandals including sexual harassment allegations leveled at hedge fund chief Crispin Odey.
In the biggest review of discrimination and bullying claims in the Square Mile ever conducted by the Financial Conduct Authority, banks reported the highest number of incidents. London’s insurance brokerages at the Lloyd’s market, which reported the highest levels of intimidation and violence, faced the most disciplinary action.
The survey is one of the first to support widely held concerns that little, if anything, has changed to improve workplace culture at finance firms since the #Metoo movement and subsequent downfall of Odey. The FCA, historically associated with taking down rogue traders and financial wrongdoing, is attempting to grapple with the scale of the problem.
The FCA warned that the survey results in the early part of the survey may have been skewed by the pandemic, adding that a more healthy reporting culture at firms will also have likely boosted the figures. The report focused on internal complaints made at the companies and not any made direct to the FCA or that wound up in an employment tribunal.
The watchdog stopped short of announcing new requirements, saying that company boards should use the survey results as a “catalyst” to see how they compare with peers. Officials plan to follow-up with firms that reported zero incidents — 16% of the largest London market insurers reported no incidents between 2021 and 2023.
Bullying and harassment cases were the most reported types of misconduct across the four financial services sectors surveyed by the FCA. Banks not only had the highest number of total incidents but fared worse as a proportion of total staff numbers. They also faced more discrimination claims even as 45% of reported incidents weren’t upheld.
“On the surface, these latest findings seem to show that far from the City dealing with these issues, it may even be going backward,” Meg Hillier, chair of the cross-parliamentary Treasury Committee, said in response to the report.
While the vast majority of internal complaints don’t leak into the public domain there have been a handful of damaging high profile examples. Ex-Barclays Plc boss Jes Staley’s relationship with late financier and sex offender Jeffrey Epstein came into sharp focus. The FCA ultimately fined him £1.8 million ($2.3 million) banning from the UK financial services industry for “recklessly” misleading regulators.
Lloyd’s of London, the world’s largest insurance exchange, has spent years trying to stamp out sexual harassment and bullying among its member firms. In 2019, the exchange announced a new campaign to encourage people to report “unacceptable behavior” and unveiled lifetime bans for inappropriate conduct.
London’s insurers had the highest proportion of bullying and harassment claims. Already on the FCA’s radar the businesses have been singled out in London as having “a long way to go” in building an inclusive culture.
The FCA surveyed more than 1,000 firms, and received responses as varied as complaints about pets coming into work as well as more serious reports about alcohol fueled behavior. Some 4% of regulated firms failed to complete the survey, while an earlier Bloomberg Freedom of Information request showed one-quarter of firms missed an initial deadline to respond.
The survey is part of a move to go further in pushing firms to tackle non-financial wrongdoing. The regulator is also now considering requiring employers to investigate an individual’s behavior outside of the office if there are misconduct concerns.
Among the other findings, the FCA reported that that number of confidentiality agreements or settlements declined. That came after the Treasury Committee members advised the government to ban the use of nondisclosure agreements in workplace sexual harassment disputes. Some 3% of sexual harassment complaints were ended with a settlement, the FCA said.
--With assistance from Katharine Gemmell.
©2024 Bloomberg L.P.
