FCA’s CEO Speech at Women In Finance Annual Review

Last week Nikhil Rathi, the FCA’s CEO, made a speech at the launch of the HM Treasury Women in Finance Charter Annual Review on why diversity and inclusion are regulatory issues.

At an event focussed on gender equality, Mr Rathi made a compelling case for equality in all its guises, including not only gender but ethnicity, sexual orientation, disability and social background. Evidence shows that there is a strong business case for diversity. According to McKinsey* research, the most diverse companies, for example, are 35% more likely to outperform the least diverse.  Diversity is not only good for a firm’s performance but also reduces conduct risk. Lack of diversity in firms raises questions about the firm’s ability to adequately respond to the needs of their customers (in particular the most vulnerable customers) and increases conduct risk; those firms that fail to reflect society run the risk of poorly serving diverse communities. At that point, diversity and inclusion become regulatory issues.

As an employer, the FCA is leading by example in relation to diversity and inclusion; it has set itself ambitious targets and is determined to improve the diversity of its own workforce and to ensure its culture is inclusive.  Additionally, as a regulator, the FCA expects the firms and markets it oversees to do the same. The FCA is working with the PRA to formalise their regulatory approach to diversity and inclusion, with a view to making their expectations clear.  Firms and their senior managers should expect increasingly tough questions from the FCA about representation throughout their organisations and whether their culture is open and inclusive, and provides a safe space for colleagues at all levels. Ultimately, the FCA sees improving diversity and inclusion as both a matter of fairness and a crucial way to strengthen consumer outcomes.

Mr Rathi warned that if the FCA does not start seeing improvements in diversity at senior levels and better answers to its diversity and inclusion related questions, it will consider how best to use its powers. There are supervisory tools the FCA can call upon, for example, expanding the remit of senior manager applications to include consideration of the diversity of management teams and the inclusivity of the management culture they create.  How capital markets work also need to be a focus, including exploring whether diversity requirements should be part of the premium listing rules.

It is clear that, while the specifics of what the FCA and the PRA expect in terms of diversity and inclusion are yet to come, this issue is moving up the regulators’ priority list and, to the extent they haven’t already done so, firms and their senior managers need to follow suit.

Source: Nikhil Speech at the HM Women Charter Annual Conference which was on line for all signatures like Sturgeon on 17th March 2021 (Sturgeon Ventures was registered attendee).

Source: FCA Website also highlights his speech: https://bit.ly/3daa0Cx

Sturgeon Ventures was one of the first signatures to the HM Treasury Women in Finance Charter. Sturgeon Ventures was set up in 1998 and in 2000 pioneered regulatory hosting coining the phrase the Regulatory Incubator.  As far as Sturgeon believes, it was the first firm to use the Appointed Representative in a wholesale model in 2003. Sturgeon has had an agile workforce for the past 20 years (long before Covid19) with the whole team on flexible hours, working predominantly from home offices with more than 50% of the team as women and whose Investment Committee is all women; a useful bonus to Start-up managers who come to us for Incubation who are still predominantly men.

You might like to read:

Sturgeon Ventures’ Equality and Diversity Policy

FCA Keynote Speech at the Women in Investment Festival

Regulatory Hosting Services


Source: *Mckinsey: Exhibit 1https://mck.co/2PdS6Xl

HM Treasury Women Charter  In Finance 28 new signatures announced on 28th March 17 2021 and full list: https://bit.ly/39nKiJs

Analysis of the Signatures and who missed their targets in 2020: https://bit.ly/3fj6LeA


For Information Purposes Only: This update was prepared in house from various sources and is distributed by Sturgeon Ventures. It is for general informational purposes only. The information contained herein does not constitute or offer legal or other advice and you should not rely on it as such advice. Although all reasonable skill and care has been taken in compiling this financial promotion, no warranty is given as to its accuracy or completeness. The opinions expressed accurately reflect the views at the date of this update and, whilst the opinions stated are
honestly held, they are not guarantees and should not be relied upon and may be subject to change without notice.

Sturgeon Ventures LLP (FRN 452811) is Authorised and Regulated by the UK Financial Conduct Authority (FCA) www.fca.gov.uk

March 2021