A recent survey conducted by the Financial Conduct Authority (FCA) indicates a significant rise in reported incidents of bullying, sexual harassment, and other misconduct within City firms. This comprehensive analysis offers insight into the current culture prevalent in the financial sector.

The FCA’s data, which encompassed 984 firms in banking, broking, and insurance, identified a total of 2,347 cases of non-financial misconduct over the past year. This marks an increase from 1,670 incidents reported in 2022 and 1,363 in 2021.

In terms of prevalence, the data reveals that in 2023, there were 7.2 incidents per 1,000 employees, compared to 5.1 in 2022 and 4.2 in 2021, calculated based on the aggregated headcount of firms as of February this year. Wholesale banks recorded the highest rates of misconduct. Notably, bullying and harassment accounted for 26% of reported incidents, with discrimination following closely at 23%.

Interestingly, 41% of the reported cases fell into a miscellaneous category of misconduct, which included issues beyond specific incidents such as sexual harassment, drug use, and violence or intimidation. This broader category encompassed behaviors like alcohol misuse and inappropriate language, as well as bringing pets to the workplace.

This survey marks the first of its kind by the FCA and comes amidst intensified scrutiny surrounding workplace conditions in the City, driven by high-profile scandals, including sexual misconduct allegations against hedge fund manager Crispin Odey, who has denied any wrongdoing.

While the FCA emphasized that a high number of complaints could reflect a healthy workplace culture where employees feel empowered to raise concerns, it acknowledged the challenges in interpreting its findings. Notably, 4% of the 1,028 firms contacted did not respond to the mandatory request for data. Additionally, the figures from 2021 may have been influenced by Covid-19 restrictions, which resulted in many employees working from home.

Dame Meg Hillier, chair of the Commons Treasury committee, which has previously addressed sexism in the workplace, expressed intentions to seek further clarity on this matter during the next session with the regulator in Westminster. She noted, “These findings suggest that instead of addressing these issues, the City may be regressing.”

The FCA does not anticipate issuing new best practice recommendations based on these results; however, it encourages firms to utilize this data as a point of reference for reevaluating their internal controls and policies, suggesting that industry trade associations play a crucial role in coordinating efforts.

Of the reported incidents, 43% resulted in disciplinary measures or other actions, although the regulator noted that the docking of employee pay was infrequently applied. Cases involving discrimination were most often associated with settlements or confidentiality agreements, primarily among wholesale banks, despite a general decrease in their usage over the surveyed three-year period.

The action taken in response to misconduct varied significantly by type, as 62% of discrimination claims were not upheld. The FCA urged the sector to examine these varying outcomes and assess if they are justifiable.

UK Finance, the industry trade group, shared that firms will review and enhance their approaches to addressing misconduct as necessary, while the Association of British Insurers emphasized the urgent need to fortify governance related to workplace culture.