City of London: Financial Chiefs Oppose DEI Targets Amid Mounting Business Backlash

Financial executives are urging the Financial Conduct Authority (FCA) to abandon plans to mandate diversity targets, citing concerns over growth and regulatory overreach.

Banks and investment firms have escalated pressure on the FCA, claiming that diversity, equity, and inclusion (DEI) rules would stifle growth. Chief executives have directly approached Nikhil Rathi, FCA CEO, to express their opposition, arguing that stricter DEI targets impose excessive bureaucracy.

Despite a consultation in 2023 recommending companies establish diversity and inclusion plans, industry leaders contend that the FCA is pursuing a cumbersome reporting regime that would increase HR staffing rather than promote meaningful diversity.

Rathi acknowledges the need for government guidance before implementing DEI measures, emphasizing alignment with the Labour Government's focus on reducing red tape and fostering growth.

The City has grappled with diversity and sexism for years, but efforts have been criticized as ineffective. A recent Treasury committee report highlighted women's continued fear of reporting workplace abuses in the male-dominated industry. Senior FCA staff reportedly considered the Crispin Odey scandal in shaping DEI policies.

Non-financial misconduct complaints have surged by 72% in City firms over the last three years. Nonetheless, critics argue that the FCA should focus on addressing the root causes of harassment rather than introducing vague compliance frameworks.

Conservative leaders have accused the FCA of overreach, asserting that DEI initiatives could hinder growth. A poll of 500 City executives revealed that a third believe DEI has overstepped its bounds.

The resistance mirrors similar opposition to DEI programs in the United States, with former President Donald Trump condemning them as wasteful and radical.

An FCA spokesperson acknowledged the government's ongoing work on employment rights and other diversity-related initiatives and indicated that the FCA would consider next steps in light of these developments.