Sexual harassment reports to the Financial Conduct Authority (FCA) have more than tripled between 2020-2021 and 2021-2022, according to employment and partnership law specialists Fox & Partners.
The figures relate specifically to whistle-blower reports, which increased from three to ten last year.
Sexual harassment in the workplace constitutes unwanted behaviour of a sexual nature which can include physical, verbal, and written acts, including remarks about an employee’s appearance, questions about their sex life, offensive jokes, propositions, advances or making promises in return for sexual favours, as well as emails, text or social media messaging with content of a sexual nature. The Equality Act 2010 protects employees, contractors, and job applicants against sexual harassment at work.
The increase follows the end of social distancing and the return to the office, resulting in an uptick in socialising outside of working hours and spending time at work events like Christmas and Summer parties. These events have historically been linked to cases of sexual harassment, particularly when alcohol is consumed.
Fox & Partners has cited the importance of appropriate systems and controls in financial services firms, stressing that they will help minimise sexual harassment and ensure that complaints are dealt with quickly, consistently, and thoroughly.
Catriona Watts, Partner at Fox & Partners, said: “Sexual harassment reports are beginning to edge up as financial services employees spend more time in the office.
“The CBI scandal shows just how damaging allegations in this area can be to an organisation and how a poor workplace culture where misconduct can thrive can lead to severe problems.
“When it comes to tackling the issue of sexual harassment, it’s vital that companies have in place proper systems and processes to identify and properly investigate harassment claims. Effective procedural safeguards that protect accusers, clear guidance on dealing with alleged perpetrators fairly, and reporting properly to stakeholders at all stages of the process are essential.”
Although the FCA has been traditionally seen as the conduct regulator for financial activities like insider trading and market manipulation, it has taken an increasingly hardline approach to the city’s wider culture.
The watchdog received 189 non-financial misconduct complaints between July 2021 and April this year, and it is currently investigating four cases. ‘Non-financial misconduct’ includes sexual harassment as well as bullying, physical aggression, exclusion, and social misbehaviour.
As part of its latest approach to dealing with sexual harassment and other non-financial misconduct, the FCA has included using the Senior Managers and Certification Regime (SMCR) to ensure individuals are held accountable. This means these behaviours are considered when managers are judged ‘fit and proper’ to do their jobs, and any serious breaches can result in a fine or a ban from working in the industry. It’s hoped that these measures might also give more women the confidence to come forward and report misconduct.
The regulator has described non-financial misconduct as relevant to its assessments of firms as far back as 2018. Subsequently, in an open letter to insurers, it said: “Poor culture in financial services can lead directly to harm to consumers, market participants, employees and markets. It was a key root cause of recent major conduct failings within the industry.”
The move was particularly momentous in the financial services industry, which is still considered a ‘man’s world’. Women continue to be significantly underrepresented in leadership positions, and the top five gender pay gaps by sector are all financial services. The gender pay gap for the industry is meaningfully higher than the UK average of 12.1% and sits at 26.6%.
The FCA’s no-tolerance approach to sexual harassment reflects the culture shift in the financial services industry. Other initiatives like The Women in Finance Charter, launched in 2016 by HM Treasury, also contribute to this by committing to building a more balanced and fair industry. The pledge for gender balance across financial services has over 400 signatories and links executive pay to gender diversity targets and requires firms to commit to the progression of women into senior roles.