CII advise against a ‘one-size-fits-all’ approach to EDI
In a recent webinar on ‘Crafting EDI strategies in an evolving regulatory landscape’, formed in collaboration with the Association of British Insurers (ABI), Dr Matthew Connell, Director of Policy and Public Affairs at the Chartered Insurance Institute (CII) addressed criticism faced by the Financial Conduct Authority (FCA) on the topic of regulation within the Equality, Diversity and Inclusion (EDI) space.
Dr Matthew Connell said: “The regulation aspect of [EDI] is focused 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.
To understand where the FCA's coming from, I think we've got to look at the wider statements that it makes, not just about EDI, but also about vulnerability, because it's in that interaction with clients and making that interaction meaningful.
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. 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.”
On the Treasury’s Sexism in the City report, Dr Matthew Connell said: “There were a lot of perceptive conclusions in the Sexism in the City report, but I think also maybe the Committee missed the point to some extent about what the FCA is doing, when they said they didn't see the point of the FCA’s data collection requirements, and that these requirements could be a tick box exercise that was duplicating work that's already being done. And I think that perhaps the Committee missed the point that what the FCA is offering as a regulator is consistency of reporting and adoption of common standards, which I think is a very powerful element.
At the heart of what the regulators are trying to promote is a culture that comes from firms learning about the needs of their different customers through the lens of diversity. And then again, that doesn't necessarily mean employing people from lots of different backgrounds or lots of different protected groups, but actually becoming involved in networks that are available to them through their profession to gain perspectives more widely.”
The CPD event, hosted by Vivine Cameron, EDI Manager for the CII, was crafted to help insurance and personal finance professionals approach the proposed FCA EDI Regulatory rules, as outlined by CP23/20.
The ABI’s Janice Fordjour, Policy Adviser for Prudential Regulation, and Liisa Antola, Senior Policy Adviser for Diversity, Equity and Inclusion, also joined the webinar to discuss its industry response to the regulators ongoing consultation of diversity and inclusion in the financial sector.
Following the webinar, Janice Fordjour, said: “The ABI is very supportive of the efforts of the FCA and PRA and their work to improve diversity and inclusion across the financial sector. We welcome the proposals set out in the regulators’ consultations that would encourage firms to collect employee data across a wider range of DEI considerations – experience shows us that what gets measured, gets managed. We will continue to outline areas that require further consideration and contribute to policy which reflects the diversity of our membership.”
Liisa Antola said: “I am proud to say that the ABI and its members have been genuinely committed to diversity, equity and inclusion (DEI) for a number of years. Supported by the guidance and objectives set out in our DEI Blueprint, we believe that our members are well placed to comply with the regulators’ proposals, if given an appropriate timeline to action any changes in the regulators’ requirements. We will continue to champion and support our members to deliver diversity and inclusion strategies that can make palpable change.”