On 14 May 2024, the House of Commons’Treasury Committee published a report setting out the responses of HM Treasury, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) to its March 2024 report on sexual harassment and bullying in the financial services sector.

In the Committee’s report, published in March 2024 as part of its Sexism in the City inquiry, MPs found that many of the barriers to women remain stubbornly in place and firms still treat diversity and inclusion as a ‘tick box’ exercise rather than a core business priority. The Committee called for a number of changes to existing workplace practices. One reform put forward was a total ban on the use of non-disclosure agreements (NDAs) in all harassment cases. 

HM Treasury’s response

In its response, HM Treasury highlights action it has taken in preventing the use of NDAs in other sectors and states that an NDA would ‘most likely’ be unenforceable when related to reporting a crime to the police. It does not commit to taking forward the Committee’s recommendation. 

Another recommendation made by the Committee was for stronger protections for sexual harassment whistleblowers, a ban on prospective employers asking for salary history and a legal requirement to include salary bands on job adverts. HM Treasury confirms in the response that it is continuing to review the whistleblowing framework with a view to understanding how it can be improved. 

Chair of the Treasury Committee, Dame Harriett Baldwin, said: “Backed up by a huge amount of compelling evidence, our Committee set out a number of recommendations which would create a fairer, safer environment for talented women trying to get on in the UK’s world-leading financial services sector. Steps like banning NDAs in all harassment cases and removing biases which benefit men in salary negotiations are straightforward, logical measures which would have a huge impact on people’s lives. I would continue to urge the Government to increase the pace of progress and competitiveness in this important sector.”

PRA’s response

The PRA’s response includes an update on its consultation process, since publishing its consultation CP18/23 in September 2023. It notes that it is currently considering the responses received to the consultation, along with feedback from industry roundtables and other engagement with stakeholders during the consultation period, and confirms that alongside these it will carefully consider the Committee’s recommendations in determining any next steps (about which no decisions have yet been made).

The response then moves on to address each of the specific report recommendations addressed to the PRA. This includes noting that the PRA has committed to monitor the effects of the removal of the bonus cap on firms’ remuneration structures, with the intention of monitoring the prudential impact of incentives as well as individual and collective accountability in firms. The PRA confirms that it will work with the FCA, the Government Equalities Office (GEO) and the Equality and Human Rights Commission (EHRC) on this and will seek to review the policy at the earliest opportunity that sufficient evidence is available.

FCA’s response

By way of update on its work relating to diversity and inclusion, the FCA states that, alongside the PRA, it is still working through responses to its consultation CP23/20, and will carefully consider what its role should be in light of the Committee’s views and those of respondents. The FCA plans to take the time necessary to consider next steps and set out how it has taken the Committee’s report into account when publishing its final policy.

One point worth highlighting from the FCA’s response to the report’s specific recommendations is that the FCA is now prioritising its work on non-financial misconduct, including sexual harassment and bullying, and it will take some time to fully consider the very wide range of responses received to its proposals on diversity and inclusion.

The FCA also agrees with the Committee that it is important to monitor and formally review the impact of the bonus cap on gender pay and inequality, and confirms that it will work with the PRA, GEO and EHRC to carry out this review.

In addition, on whistleblowing, the FCA confirms that it is currently considering how to improve its approach to whistleblowing, and will take the opportunity to consider how to communicate publicly any changes it makes.