FCA publishes culture and non-financial misconduct survey findings

The FCA has published a report setting out key findings from its February 2024 survey on culture and non-financial misconduct.

The survey was issued to 1,028 regulated wholesale firms, and enquired about recorded incidents of non-financial misconduct in 2021 – 2023. It was the first comprehensive non-financial misconduct data gathering exercise across the targeted sectors. “Incidents” were alleged or confirmed occurrences of non-financial misconduct that were reported to or identified by the firm, including those not already reported to the FCA or that did not meet its reporting threshold.

Key findings included:

• Reported non-financial misconduct incidents increased over the surveyed period;
• The distribution of non-financial misconduct types varied by sector, but bullying and harassment (26%) and discrimination (23%) were the most reported types across all sectors. There were 41% of non-financial misconduct incidents reported in the ‘other’ category;
• Firms identified incidents through reactive routes such as grievances or similar formal processes (50%) and alternative reporting routes such as whistleblowing.
  • They also identified incidents through firm-led detection methods such as market surveillance and could report multiple detection methods for 1 incident;
• Disciplinary or ‘other’ actions were taken in 43% of cases.
  • In the remainder, there was a range of outcomes – either cases were not investigated or unable to conclude, not upheld, upheld with no other action, or investigations were ongoing;
• Some reported non-financial misconducts, such as violence and intimidation, more often resulted in disciplinary actions compared to other types, such as discrimination;
• The total number of confidentiality and settlement agreements signed by complainants fell over the 3 years surveyed, according to the data from the wholesale banks sector. Data from other sectors showed no clear trend;
• Discrimination – with 23% of cases on average across all sectors – had the highest percentage of incidents resulting in the complainant signing either a settlement or confidentiality agreement;
• In all sectors, action taken following non-financial misconduct rarely resulted in remuneration adjustment.
  • When remuneration was adjusted it was mostly against unvested variable pay.
• Some relevant policies, like whistleblowing and disciplinary policies, were not in place at all firms surveyed.