The Chartered Insurance Institute (CII) has urged against a ‘one-size-fits-all’ approach to equality, diversity, and inclusion (EDI) regulations during a recent webinar titled ‘Crafting EDI strategies in an evolving regulatory landscape’.
The event, held in collaboration with the Association of British Insurers (ABI), featured Dr Matthew Connell, director of policy and public affairs at the CII, who addressed the criticisms faced by the Financial Conduct Authority (FCA) regarding EDI regulation.
Connell emphasised that EDI regulation focused on actions that only the regulator could undertake, highlighting the importance of market culture and daily practices.
He noted that while the FCA faced criticism for not having prescriptive or comprehensive rules, EDI is a developing area.
He said: “There’s a huge amount of test-and-learn that’s going on in terms of balancing out not just the needs of different protected groups, but also issues around intersectionality and how being a member of more than one protected group might change people’s circumstances.
“To understand where the FCA’s coming from, I think we’ve got to look at the wider statements that it makes, not just about EDI, but also about vulnerability, because it’s in that interaction with clients and making that interaction meaningful.
“I think that the FCA sees the real heart of inclusivity and diversity, and how that can make a real difference for consumers and people working in financial services.
“In 2022, for example, the FCA had a policy statement on the Consumer Duty where it says ‘diversity is a lens that can help firms to better understand and meet the needs of their customers, including those in vulnerable circumstances’.
“We see significant practical benefits in firms exploring customer’s needs from different perspectives.”
He added: “So, if we only look at the rules the FCA is proposing, and not at the cultural change that they’re challenging us to make, I think that means that we as a profession would be missing out on something very fundamental, and it would invite, actually, the wrong kind of regulation, which is following up with more and more waves of prescriptive regulation that tends to be more one-size-fits-all.”
Discussing the Treasury’s ‘Sexism in the City’ report, Connell also acknowledged its conclusions but suggested that the committee overlooked the FCA’s efforts.
He defended the FCA’s data collection requirements as crucial for ensuring consistent reporting and common standards.
Connell stressed that the regulator’s goal was to foster a culture of understanding different customer needs through the diversity lens, which does not necessarily require employing people from various backgrounds but engaging with diverse professional networks.
The webinar, hosted by Vivine Cameron, EDI manager for the CII, aimed to assist insurance and personal finance professionals in navigating the proposed FCA EDI regulatory rules outlined in CP23/20.
Joining the discussion were the ABI’s Janice Fordjour, policy adviser for Prudential Regulation, and Liisa Antola, senior policy adviser for diversity, equity, and inclusion, who shared the industry’s response to the ongoing consultation on diversity in the financial sector.
Post-webinar, Fordjour expressed the ABI’s strong support for the FCA and PRA’s initiatives to enhance diversity and inclusion in the financial sector.
She highlighted the value of the proposed requirement for firms to collect employee data across a broad range of EDI considerations, asserting that measurable data drives management.
Fordjour said the ABI would continue to advocate for areas needing further attention and contribute to policies reflecting its membership’s diversity.
Antola praised the ABI and its members for their longstanding commitment to DEI.
She said that, guided by the DEI Blueprint, ABI members were well-prepared to meet the regulators’ proposals, provided they have sufficient time to implement the required changes.
She said: “I am proud to say that the ABI and its members have been genuinely committed to diversity, equity and inclusion (DEI) for a number of years.
“Supported by the guidance and objectives set out in our DEI Blueprint, we believe that our members are well placed to comply with the regulators’ proposals, if given an appropriate timeline to action any changes in the regulators’ requirements.
“We will continue to champion and support our members to deliver diversity and inclusion strategies that can make palpable change.”
