Five Key Questions on the draft UK financial regulatory diversity and inclusion rules

Other Author      Justin Brandt-Sarif, Trainee Solicitor

The Financial Conduct Authority ("FCA") and Prudential Regulation Authority (“PRA”) (together, the “Regulators”) have issued consultation papers setting out draft rules to implement diversity and inclusion (“D&I”) reporting and disclosure requirements, amongst other things. The Regulators have collaborated on the draft rules to ensure consistent application to dual regulated firms.  

Summary of proposals

The Regulators propose to require certain regulated firms to:

1. report their average number of employees on an annual basis;
2. collect, report and disclose certain D&I data;
3. establish, implement and maintain a D&I strategy;
4. determine and set appropriate diversity targets; and
5. embed D&I as a non-financial risk in staff fitness and propriety assessments, conduct rules and governance structures, amongst other things.

The rules will be finalised in 2024 and reporting obligations will begin from twelve months after the publication of the final rules.  The reporting window will be a period of  three months from the reporting reference date. For example, if the final rules were published on 1 March 2024, the first reporting reference date would be 1 March 2025 and firms would have until 2 June 2025 to report their D&I data to the Regulators.