The Bank of England has launched a hunt for “unconscious bias” in the City of London as part of a diversity and inclusion push.
The Bank’s Prudential Regulation Authority (PRA) and the City watchdog have proposed a raft of new rules that would require large banks and insurers to report diversity and inclusion data to regulators and set new targets to address “under-representation”.
Under the plans, companies in the City would be mandated to develop a diversity and inclusion strategy and collect, report and disclose data on characteristics such as disability and ethnicity of staff.
Companies can also choose to go further by reporting data on gender identity and socio-economic background of staff, the regulators said.
The PRA said that the proposals “require the gathering of evidence, so that firms can assess where there is relevant disadvantage, need, or lack of participation, including where there are unequal opportunities connected to… unconscious bias [or] discriminatory practices”.
Regulators and companies are increasingly keen to show they are tackling the concept of unconscious bias – making assumptions about people based on characteristics such as gender, race or background – by trying to alert staff to hidden prejudices that might influence their behaviour.
However the results of training programmes have been mixed, with Whitehall scrapping its unconscious bias training in late 2020 after finding little conclusive proof that it works.
In 2021, Bill Michael, the boss of KPMG, stepped aside following an outburst in which he said unconscious bias was “complete c--p”, triggering a backlash from staff who argued that dismissing the concept was “reckless” and reflective of his own privilege.
He later apologised for the comments.
The PRA and the Financial Conduct Authority (FCA) said the proposed new rules would support healthy work cultures, reduce groupthink and unlock talent.
Sam Woods, chief executive of the PRA, said: “Diversity and inclusion play an important role in guarding against groupthink within firms. Stronger diversity and inclusiveness should also make firms more competitive by enabling them to attract a wider pool of talent.
“The proposals set flexible, proportionate minimum standards to raise the bar, placing more requirements on larger firms.”
Earlier this week, the Telegraph revealed that the FCA was preparing to launch a crackdown on workplace misconduct following allegations of sexual harassment against the hedge fund tycoon Crispin Odey. Mr Odey has “strenuously disputed” the allegations.
The proposed reforms also include new rules and guidance to spell out how “non-financial misconduct”, such as harassment and bullying, forms part of the regulator’s “fit and proper” test for financial services employees.
James Alleyne, a legal director at law firm Kingsley Napley, said: “Regulated firms and individuals should have no doubt that this represents a big shift in the way the FCA will monitor and potentially sanction those in the financial community.”