The FCA has published key findings of our culture and non-financial misconduct survey, which examined how firms detect and handle non-financial misconduct incidents.
In February 2024, we sent a survey to 1,028 regulated wholesale financial services firms asking about recorded incidents of non-financial misconduct in 2021, 2022 and 2023.
This was the first comprehensive non-financial misconduct data gathering exercise across these sectors and a significant step in understanding this subject matter, providing a baseline assessment of behaviours.
We use the term ‘incident’ to describe an alleged or confirmed occurrence of non-financial misconduct that was reported to or identified by the firm, including those not already reported to us or that did not meet our reporting threshold.
1. Executive summary
From the survey responses we found the following.
- The number of reported non-financial misconduct incidents increased over the 3 years surveyed.
- The distribution of non-financial misconduct types varied by sector although bullying and harassment (26%) and discrimination (23%) were the most reported types of non-financial misconduct across all sectors. There were also 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 through alternative reporting routes such as whistleblowing. Firms also identified incidents through firm-led detection methods such as market surveillance. In the survey, firms could report multiple detection methods for 1 incident.
- Disciplinary or ‘other’ actions were taken in 43% of cases. In the remainder, we saw a range of other outcomes – either the cases were not investigated or unable to conclude, not upheld, upheld with no other action, or investigations were ongoing.
- Some types of reported non-financial misconduct, 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. The 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.
- We observed some differences between sectors and between firm sizes.
Analysing the data requires understanding of the context of individual firms, sectors and changing societal expectations. We are sharing our findings and analysis to:
- allow boards at financial firms to understand the position at their firm relative to others
- enable trade associations to coordinate continued industry action
- inform the public and other stakeholders
We think that this collective process will help to drive continued positive momentum on improving culture in financial firms. We will not be making new best practice recommendations for firms at this time.
We expect firms, working with their trade associations, to use this benchmark survey data to reflect on whether their own processes, procedures and controls provide both robust detection and appropriate outcomes. We then want firms to discuss non-financial misconduct at senior management and board level.
All firms must be fully compliant with their existing regulatory responsibilities and reporting requirements. We will use the responses to the survey to inform our supervisory and policy work. We will act where firms fail to adhere to our rules.
Find out what we expect from firms
All survey findings require context and interpretation to understand, therefore care must be taken in making assessments based solely on the results that we present.
There may be a variety of commercial reasons why firms use confidentiality agreements or confidentiality clauses within settlement agreements. Confidentiality agreements cannot, however, be used to prevent public interest disclosures to us.
2. Why we did this work
We remain focused on:
- continuous improvement of the culture of the firms we regulate
- assuring the fitness and propriety of those firms’ senior managers
- requiring firms to properly assess the fitness and propriety of their certified staff
Both individual fitness and corporate culture can play significant contributory roles in the risk a firm and its staff pose to our objectives. That’s why we have taken a forthright stance and leading role among UK and international regulators on non-financial misconduct.
A corporate culture that tolerates sexual harassment or other non-financial misconduct is unlikely to be one in which people feel able to speak up and challenge decisions, or one in which they will have faith that concerns will be independently and fairly assessed. Such a culture also raises questions about a firm’s decision making and risk management.
We expect firms to have effective systems in place to identify and mitigate risks of all kinds. Should allegations or evidence of non-financial misconduct come to light, we expect a regulated firm to take them seriously through appropriate internal procedures. We can investigate and act against authorised firms that have inadequate systems and controls in this regard.
Robust processes, systems and controls are vital for mitigating all types of risk, including financial and non-financial misconduct. They are most effective when embedded within a culture that values integrity and accountability.
We continue to prioritise our work on non-financial misconduct and remain focused on promoting healthy cultures across the firms we regulate to:
- improve outcomes for markets and consumers
- reduce harm
In our recent CP23/20[1], ‘Diversity and inclusion in the financial sector – working together to drive change’, we sought to clarify and strengthen our expectations around non-financial misconduct where it is relevant for regulatory purposes. Specifically, we set out proposals to better integrate non-financial misconduct considerations into staff fitness and propriety assessments, Conduct Rules and the suitability criteria for firms to operate in the financial sector (Threshold Conditions). We want to give firms the confidence to take decisive and appropriate action against employees for instances of non-financial misconduct.
To find out more about our other work on non-financial misconduct, please read our:
- response[2] to the Treasury Select Committee (TSC)’s Sexism in the City inquiry
- letter to the TSC[3]
- sector ("portfolio") letters[4] to wholesale banks, brokers and insurers
- plans for a new policy framework to clarify our expectations around non-financial misconduct
Non-financial misconduct is wide-ranging and when allegations are made there needs to be a process to establish the facts. Allegations may involve offences that should be referred to the police or other authorities.
We can only take action to achieve or further one of our statutory objectives. Our objectives relate to:
- consumer protection
- market integrity
- promotion of competition in the interests of consumers
- our secondary objective to facilitate the international competitiveness and growth of the UK economy in the medium to long term
Our focus must be whether and how non-financial misconduct affects the delivery of those objectives.
Our enquiries or investigations are not an alternative to:
- criminal prosecution
- a firm’s internal disciplinary processes
- Employment Tribunal proceedings
Our rules and requirements are in addition to firms’ responsibilities under employment law, including under the:
- Employment Rights Act 1996
- Equality Act 2010 including the Worker Protection (Amendment of Equality Act 2010) Act coming into effect in October 2024
3. Our survey
We identified culture and non-financial misconduct as an area that firms need to prioritise due to concerns identified in wholesale sector portfolios. We define portfolios as groups of firms within a sector with similar business models.
While we receive valuable information about non-financial misconduct from many sources including regulated firms, whistleblowers and from individual cases reported publicly, we did not hold comprehensive data on how regulated firms identify and resolve non-financial misconduct.
To improve our existing data, we surveyed regulated wholesale financial services firms about:
- non-financial misconduct
- policies and procedures relating to firms’ culture
To understand how we gathered this data, see an example of our notice for firms to provide information[5] and the survey[6] we sent to firms.
3.1. The survey data
The survey results provide a baseline of data, the first of its kind for the regulated financial services sector. The results should act as a catalyst for regulated firms’ boards and trade associations to prioritise and act on issues of non-financial misconduct that lead to poor working cultures and can ultimately harm consumers or market integrity.
Publishing the survey data will increase transparency on the extent of non-financial misconduct within regulated firms. The data can help the public and employees in the industry to understand how firms have dealt with non-financial misconduct, addressing confidence and trust in an industry that is working to improve practices. It will help firms:
- benchmark themselves against their peers
- reflect on their own processes, procedures, and controls to identify and act on non-financial misconduct and whether they are appropriately robust
- review their compliance with existing regulatory responsibilities and reporting requirements for non-financial misconduct
Given the breadth of the data and the numerous variables involved, we are approaching our analysis with caution and understand the limitations of reviewing the data in isolation and without an understanding of the context of incidents. We are mindful of the potential for misleading conclusions if generalised inferences are made without careful consideration. For instance:
- a high number of incidents does not necessarily suggest a worse environment – it may in fact be an indication of a healthy speak up culture, and may reflect size and scale of a firm
- nil or a low number of incidents does not necessarily suggest a positive or improving environment
- not all recorded incidents will be substantiated, and some may be factually incorrect or vexatious
Crucially, this survey data does not cover:
- the context within a regulated firm that might lead to differences in the statistics
- what firms might be doing already to address specific issues about non-financial misconduct
3.2. Key information about the firms we surveyed
We sent a survey to 1,028 regulated wholesale financial services firms, asking for data for 3 calendar years (2021, 2022 and 2023).
The survey was sent to all firms in the following 4 wholesale FCA portfolios:
- London market insurers: Lloyd’s managing agents and London market insurers (including protection and indemnity clubs)
- London market intermediaries: Lloyd’s and London market insurance intermediaries (and managing general agents)
- wholesale banks
- wholesale brokers
The response rate was 96% (984 firms).
| Portfolio | Number of firms required to respond | Total number of firms that responded | Completion rate | Total number of employees reported |
| London market insurers | 197 | 185 | 94% | 39,210 |
| London market intermediaries | 382 | 357 | 93% | 49,150 |
| Wholesale banks | 181 | 181 | 100% | 223,457 |
| Wholesale brokers | 268 | 261 | 97% | 14,125 |
| Total | 1,028 | 984 | 96% | 325,942 |
Size of firms varied greatly between the 4 portfolios surveyed
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Data table
Firm sizes:
- small: 0 to 49 employees
- medium: 50 to 249 employees
- large: 250 or more employees
4. What we found
4.1. Reported incidents
Respondents were asked to report:
- all non-financial misconduct related incidents occurring in 2021, 2022 and 2023
- most recent or final disciplinary action or outcome for each incident
Reported non-financial misconduct incidents increased between 2021 and 2023
Incidents reported
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Data table
Incidents reported per 1,000 employees
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Data table
The number of reported non-financial misconduct incidents increased significantly over the 3 years we surveyed, both in total number and numbers of incidents per 1,000 employees. We recognise that activity in some of this period may have been influenced by the global pandemic.
The wholesale banks portfolio had the highest number of reported incidents in all 3 years. This sector has a substantially larger employee population, while also having a higher number of reported incidents per 1,000 employees.
Wholesale banks also tended to be more likely to detect incidents in multiple ways (see Figure 5 under 'How firms detect non-financial misconduct') compared with other portfolios.
The number of reported incidents between 2021 and 2023 was correlated to firm size
A high proportion of smaller firms (0 to 49 employees) reported no incidents during 2021, 2022 or 2023.
On average smaller firms had 9.1 incidents, medium sized firms had 18.7, and larger firms had 16.5 per 1,000 employees in the 3-year period.
Fewer medium sized firms (50 to 249 employees) reported no incidents. However, 68% of medium sized wholesale broker respondents reported no incidents.
The London market insurers portfolio was the only portfolio where 5 or more large firms (250 or more employees) reported no incidents over the 3 years.
The distribution of non-financial misconduct types varied by portfolio
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Data table
Wholesale banks had the lowest proportion of reported sexual harassment cases, but a greater proportion of reported discrimination cases compared with other portfolios.
London market intermediaries had the highest relative proportion of reported incidents of violence or intimidation compared with other portfolios.
We saw from responses that non-financial misconduct was broadly interpreted, and we recognise that non-financial misconduct includes many more types of misconduct than those specified in the survey. The most common category for incident type across all sectors was ‘other non-financial misconduct’.
We gave firms the option to describe what they meant by ‘other’. Their responses included:
- intoxication or misuse of alcohol within the workplace or work-related environment (sometimes contributing to poor conduct and other inappropriate behaviour)
- inappropriate or offensive language or communication style within the firm or towards third parties (both verbally and in electronic communications)
- data protection and information technology security breaches such as inappropriate sharing, access, or misuse of confidential company information
- employees engaging in retaliatory behaviour in relation to allegations made against them
- misuse of expenses or gifts and hospitality
- performance issues and related conduct breaches
- breaches of firms’ policy and procedures
Some of the incident types described by firms could be categorised as financial misconduct or employee performance issues. In comparison to some kinds of financial risk the range of possible misconduct suggests that firms will need to retain relatively flexible policies and procedures designed around principles such that they can respond proportionately to unexpected incidents.
4.2. How firms detect non-financial misconduct
Grievances or similar formal processes were the most common detection method
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Data table
Firms could report multiple detection methods for one incident. Therefore:
- the number of instances of detection reported may be higher than the number of incidents of non-financial misconduct reported
- the total number of reported instances of detection as a percentage of non-financial misconduct incidents will total above 100%
Grievances or ‘other formal escalation processes’ were the main ways that firms have identified non-financial misconduct.
Whistleblowing remains an important means for staff to raise concerns at firms. It requires trust on behalf of whistleblowers that their concerns will be handled appropriately. This method was most prevalent in wholesale banks.
Instances of detection from the use of monitoring and surveillance tools, such as the monitoring of work email or telephone communications, were still relatively small in comparison to the overall number of incidents identified through other means. We recognise that monitoring and surveillance is likely to be primarily designed by firms for other purposes rather than specifically the detection of non-financial misconduct.
Respondents in the insurance portfolios were less likely to detect alleged incidents through use of communications monitoring and surveillance. Only 1% of total incidents were detected through monitoring and surveillance for both the London market insurers and London market intermediaries portfolios. Wholesale banks and brokers were more likely to be using communications monitoring and surveillance as part of their standard monitoring and surveillance, to meet their market abuse obligations for example.
Wholesale banks were more likely to have incidents with multiple detection methods (with an overall 111% detection rate).
Respondents from all portfolios reported ‘other’ detection methods. These included:
- reports from third parties who had witnessed misconduct
- informal concerns raised with human resources function, compliance function or line managers
- line managers taking a proactive approach to identifying misconduct, particularly about staff conduct or compliance with company procedures
Firms of varying size and scale or business models may find certain detection methods are better suited to their businesses. However, all firms should consider a variety of complementary methods for identifying non-financial misconduct to improve detection and for considering information that comes in from different sources.
When using monitoring and surveillance tools that may be designed for other purposes, such as market abuse surveillance, firms should ensure they:
- comply with the UK General Data Protection Regulation (UK GDPR) and the Data Protection Act 2018 (DPA 2018)
- follow relevant guidance from the Information Commissioner’s Office[7]
Encouraging a robust speak-up culture is important, alongside safe avenues for reporting, such as whistleblowing.
In addition to using a firm’s whistleblowing functions, if individuals have witnessed, or are aware of, wrongdoing happening in the workplace, by an individual or a firm we regulate, you can contact our Whistleblowing team to report your concerns to us in confidence.
4.3. Outcomes
London market intermediaries had the:
- highest proportion of disciplinary action, with action taken on 63% of reported incidents
- lowest proportion of incidents not upheld (21%)
Wholesale banks had the highest proportion of reported incidents not upheld between 2021 and 2023 at 45%.
Across the 4 portfolios, the main outcomes described in the ‘other’ category included:
- mediation between parties leading to resolution
- management training or coaching
- employee resignation
Across all sectors there was a low number of reported incidents that were not investigated with only 2% in the London market insurers portfolio and 1% in the wholesale banks portfolio.
Proportion of reported incidents resulting in disciplinary action varied across portfolios
Overview: outcomes
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Data table
Breakdown: action taken
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Data table
Breakdown: awaiting decision or no action taken
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Data table
Excluding complaints not upheld
Overview excluding complaints not upheld:
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Data table
Breakdown excluding complaints not upheld: action taken
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Data table
Breakdown excluding complaints not upheld: no action taken or awaiting decision
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Data table
Incidents reported were often not upheld after investigation
Overview: Outcomes by non-financial misconduct type
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Data table
Breakdown: actions taken by misconduct type
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Data table
Breakdown: no action or awaiting decision by misconduct type
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Data table
Excluding complaints not upheld
Overview: outcomes excluding complaints not upheld, by misconduct type
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Data table
Breakdown: Action taken
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Data table
Breakdown: No action or awaiting decision
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Data table
62% of reported discrimination incidents and 47% of reported bullying and harassment incidents between 2021 and 2023 were not upheld.
Disciplinary or other action was taken in:
- 73% of violence or intimidation incidents
- 64% of sexual harassment incidents
Incidents that were most likely to lead to dismissal included:
- possession or use of illegal drugs (21%)
- sexual harassment (22%)
- violence or intimidation (21%)
We think that the industry, coordinated by trade associations as appropriate, should reflect on these differing rates and consider whether these are explainable.
Verbal warnings were predominantly used in the ‘other’ non-financial misconduct category. This may reflect how non-financial misconduct includes a wide range of misconduct and is not limited to the categories in our survey.
In response to all incidents we would expect firms to:
- adhere to their documented policies
- conduct a full and fair procedure
We would expect firms to do the above in accordance with our Principles[8] for business, in particular:
- Principle 2: a firm must conduct its business with due skill, care and diligence
- Principle 3: a firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems
4.4. Further outcomes
We asked respondents to provide the numbers of each type of ‘further outcome’ associated with incidents, not just the final or predominant outcome in the previous section. For example, a single incident could result in a settlement agreement and a separate confidentiality agreement.
Further outcomes included:
- settlement agreements signed by either the complainant or the subject of a complaint
- a confidentiality agreement signed by the complainant
- remuneration adjustments
Settlement and confidentiality agreements
The number of agreements signed decreased in 2023
All portfolios: confidentiality and settlement agreements signed by complainant
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Data table
By portfolio: confidentiality and settlement agreements signed by complainant
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Data table
All portfolios: settlement agreements signed by complaint subject
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Data table
The total number of confidentiality and settlement agreements signed by complainants fell between 2021 and 2023. The overall trend is heavily influenced by the data from the wholesale banks sector. Other sectors reported extremely small and fluctuating data points that had no discernible trend.
The number of settlement agreements signed by the subject of a complaint remained stable between 2021 and 2023. Despite increasing numbers of incidents reported, all types of settlement agreements have proportionately reduced. However, there are incidents from 2022 and 2023 that are still awaiting decision.
There may be reasons why firms use confidentiality agreements or confidentiality clauses within settlement agreements such as protecting commercially sensitive information when an employee leaves the firm. However, as we made clear in our response to the TSC[2], confidentiality agreements cannot be used to prevent public interest disclosures to us.
Under SYSC 18.5.1R[9], a firm must include a term in a settlement agreement that makes clear that nothing prevents an employee from making a protected disclosure.
We therefore expect that when firms enter into confidentiality agreements with staff, there would be an explicit exclusion allowing for disclosure to certain parties – including us, other regulators, and law enforcement agencies – and that the agreement makes a reference to this point.
For more information, please read the warning notice for the use of non-disclosure agreements (NDAs)[10] from the Solicitors Regulation Authority and the Equality and Human Rights Commission's guidance on the use of confidentiality agreements in discrimination cases[11].
Discrimination had the highest percentage of incidents resulting in the complainant signing an agreement
We note that for the complainants, confidentiality agreements were used less frequently than settlement agreements.
Confidentiality agreements were used:
- most frequently for discrimination (124 times) and bullying and harassment (42 times)
- infrequently for sexual misconduct and violence or intimidation
- never in respect of possession of illegal drugs
We are engaging with industry to understand the context and rationale for this.
Remuneration adjustments
We asked firms about changes to remuneration for the subject of a complaint following an incident.
We defined the types of remuneration adjustment within our survey under the ‘further outcomes’ questions.
Most remuneration adjustments were on unvested variable pay
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Data table
Firms were more likely to vary an employee’s variable pay (such as bonuses) that had not yet been paid (unvested variable pay) compared with other forms of remuneration adjustments such as fixed salary adjustment or clawback (vested pay adjustment).
London market intermediaries, London market insurers and wholesale brokers reported little or no use of clawback as a response to non-financial misconduct during the 3 years we surveyed.
4.5. Processes and procedures
Adoption of different policies varied across portfolios
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Data table
Whistleblowing
Not all respondents stated that they have a current whistleblowing policy in force (in 2024).
SYSC 18.3.1[12] states that a firm (as defined in SYSC 18.1.1AA G[13]) must establish, implement and maintain appropriate and effective arrangements for the disclosure of reportable concerns by whistleblowers. This includes (but is not limited to) up-to-date written procedures that are readily available to the firm’s UK based employees outlining the firm’s processes for complying with SYSC 18.3.
Remuneration
In 2024, current remuneration policies were in force in:
- 92% of wholesale banks
- 80% of London market insurers
- 46% of London market intermediaries
- 84% of wholesale brokers
For London market intermediaries and wholesale brokers, how regulation and remuneration requirements apply may affect the responses for those portfolios as a remuneration policy may not be mandatory.
Under our remuneration codes, firms must have remuneration policies and practices that are consistent with, and promote, sound and effective risk management.
The dual-regulated firms Remuneration Code (SYSC 19D[14]) applies to dual-regulated firms comprising:
- UK banks
- UK designated investment firms
- building societies
- certain overseas firms
SYSC 19G[15] (MIFIDPRU Remuneration Code) applies to FCA solo-regulated firms.
Similarly, all insurance and reinsurance firms within the scope of the Solvency II Directive must have a remuneration policy (see Article 275 of the Solvency II Regulation).
The Prudential Regulation Authority (PRA) provides guidance for significant (PRA Category 1 and 2) Solvency II firms in its supervisory statement 10/16[16].
4.6. Governance and management information
38% of total respondents stated that a board or a board level committee did not receive management information (MI) about non-financial misconduct. This may include respondents that do not have a regulated entity level board.
33% of total respondents stated that they have no formal governance structure or committee that decides the outcomes and disciplinary actions for those involved in non-financial misconduct cases.
The chart below shows the percentage of large firms (250 or more employees) in each portfolio that had:
- no formal governance structure/committee for non-financial misconduct (NFM) outcome/action decisions
- no board-level management information (MI)
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Data table
We expect firms to take a proportionate approach to governance and the provision of MI and we recognise that firm size in our survey varied significantly. However, the responses to questions about board MI and governance structures suggest that large firms’ governance and oversight of non-financial misconduct could be falling short of our expectations for the size, nature and complexity of the firms’ businesses.
Firms of all sizes and business models must adhere to our Principles (PRIN 2.1.1R).
Firms should benefit from safer and healthier cultures and may gain a competitive advantage if:
- they safeguard their culture with effective and fair governance
- their board and senior management can monitor the results through accurate MI
4.7. Regulatory references
Including non-financial misconduct
92% of respondents said they would include incidents of non-financial misconduct in a regulatory reference (should the situation arise).
In practice, the number of regulatory references that contained information relating to non-financial misconduct that firms reported in the survey steadily increased from 16 in 2021, to 21 in 2022 and 43 in 2023.
When another firm asks for a regulatory reference, firms should consider their obligations under the main rules in SYSC 22.2[17], in particular:
- SYSC 22.2.2R(2)
- SYSC 22.2.2R(3)
When hiring employees for Senior Management and Certification Function roles, firms should also understand their obligations to get a reference, under SYSC 22.2.1R.
Updating a reference
Following a non-financial misconduct incident, 87% of respondents said they would update a regulatory reference.
Where a firm within the Senior Managers and Certification Regime (SM&CR) learns of an incident that would have changed how a reference was drafted if they had been aware of it at the time, and it is reasonable to consider the differences to be significant for an assessment by the new firm of the fitness and propriety of the person for the role, they must provide the details of the differences in writing as soon as reasonably practicable.
When updating a regulatory reference, firms should follow SYSC 22.2.4R, SYSC 22.2.5R and SYSC 22.2.6R.
Fit and proper employees
The number of individuals being hired where an incident of non-financial misconduct was included on the regulatory reference halved, across all portfolios, from 10 in 2021 to 5 in 2023.
Some incidents of non-financial misconduct that lead to no disciplinary action being taken may fall outside the regulatory reference requirements. However, firms should not withhold information which they reasonably believe would impact the assessment of an individual's fitness and propriety. This could include circumstances where the individual left while under investigation (Question G, SYSC 22 Annex 1[18]).
Firms should:
- consider their obligations under the relevant competent employees rule within SYSC when hiring individuals with adverse information on a regulatory reference
- ensure that individuals remain fit and proper as stated in FIT 1.3
Respondents also reported a steady increase in amending employees’ Fit and Proper (FIT) assessments across all 3 years.
Across all sectors, between 2021 and 2023, a total of 93 individuals had their FIT assessment amended because of a non-financial misconduct-related incident that either took place in the workplace or was unrelated to the workplace.
Most of these amendments were because of:
- ‘other non-financial misconduct’ (34 across all 3 years)
- sexual harassment (22 across all 3 years)
Firms with fewer than 50 employees were most likely to amend FIT assessments due to a non-financial misconduct-related incident (49% of all instances).
We remind firms within SM&CR to consider all relevant matters, including incidents of non-financial misconduct, when conducting an employee’s fitness and propriety assessment.
In addition, a senior manager’s failure to take steps to address non-financial misconduct could lead us to determine that they are not fit and proper.
For more information, please read our Dear CEO letter[19] to insurance firms (January 2020).
5. About the data
There will be limitations to the accuracy of our survey data.
Readers should consider the following.
- Respondents may have taken different approaches to interpreting the survey categories and reportable incidents.
- Not all incidents may result in a disciplinary outcome. All incidents need an appropriate investigation by a competent party dependent on the nature of the alleged behaviour.
Timing
- Calendar years selected for the survey include time periods when Covid-19 related restrictions were in place.
- The total number of employees recorded for each respondent is as of February 2024 and will not capture changes in the number of employees from 2021 to 2023. This means that some percentage statistics that use employee numbers may not be accurate.
Incident ratios
- Respondents were asked to populate the most recent or final outcome for each reported incident. There is a 1:1 ratio for these findings.
- Respondents were asked to populate all detection methods for each incident and all further outcomes for each incident, therefore these findings do not have a 1:1 ratio.
- We define ‘disciplinary action’ in Figures 6 and 7 as verbal or written warning or dismissal, which is aligned with FSMA 64C.
Consolidated responses from groups of firms
- Some groups submitted a consolidated response that included multiple regulated entities in their group, so the number of responses we received is fewer than the number of firms that received the survey. However, all firms included in consolidated returns are recorded within the total number of responding firms.
- Where groups have provided consolidated responses for firms that span more than 1 portfolio, we have included the number of employees reported in the primary portfolio the respondent indicated in their response.
- There may be some double counting of employees where respondents have reported individual responses for entities in their group.
Meaning of ‘incidents’
- In our survey and when presenting our findings, we refer to ‘incidents’ and take this to mean any alleged or confirmed occurrence of non-financial misconduct that:
- was reported to or identified by the firm
- fits the parameters explained in our notice to provide information[5]
- We did not gather information about individual incidents and are not using survey responses to reassess the judgements firms have made when responding to allegations or incidents.
Confidentiality agreements
- A confidentiality agreement (or confidentiality clause within a settlement agreement) is sometimes referred to as a non-disclosure agreement (NDA).
Rounding
- Where non-zero figures in our graphs would normally round to 0%, we have rounded up to 1% to indicate there was at least 1 response in that category.
6. Next steps
6.1. What we expect from firms
Following this publication, we expect firms to reflect on the data and consider how their own performance compares with their peers.
We want firms to discuss non-financial misconduct at senior management and board level and consider whether they need to take steps to improve:
- their culture
- how they identify and manage risks
- how they address non-financial misconduct on an ongoing basis
This also encourages sharing of good practice across firms, for example through trade association forums.
Firms should:
- enable employees to speak up about non-financial misconduct
- establish ways for employees to raise concerns, including formal processes for whistleblowing where these are not already in place
We are aware an individual firm’s approach will vary according to its size and the nature of its operations. However, we expect firms to:
- take allegations of non-financial misconduct seriously
- have effective systems in place to identify, investigate and remedy promptly and fairly when allegations are substantiated
- be fully compliant with their regulatory responsibilities and reporting requirements, regardless of size or sector
6.2. Our actions
The responses to the survey will inform our ongoing supervisory work across the 4 portfolios.
We will:
- engage with firms to understand their results and how they have used the data to reflect on their own culture, focusing on the firms that are outliers from their peer groups
- support trade associations to lead industry efforts to improve standards using the survey data
- continue to communicate with firms and set our regulatory expectations through our portfolio letters
- act where we find firms fail to adhere to our rules
In this publication we have sought to draw out the key themes present in the survey data. We will not publish individual firm data.
While we expect firms to have developed a speak-up culture and the right processes to identify non-financial misconduct, including whistleblowing functions, we continue to promote our own whistleblowing line.
Individuals can report misconduct to us, regardless of whether they have raised concerns internally at their firm first.
Any member of the public, including firm employees, can use our whistleblowing line to report misconduct, including non-financial misconduct.
6.3. Policy changes
We will not be publishing best practice or guidance to firms at this time. However, we are considering feedback to our consultation CP23/20: ‘Diversity and inclusion in the financial sector – working together to drive change[1]’.
We will publish our finalised policy in due course, including on how non-financial misconduct should be considered within our rules.