FCA and PRA confirm ‘no plans’ to take regulatory D&I proposals further

The FCA and Prudential Regulation Authority (PRA) have confirmed that they have no intentions of taking forward proposed work on improving diversity and inclusion at regulated firms.

In a letter to the Treasury Select Committee, published this afternoon (12 March 2025), the two market regulators admitted that “in light of the broad range of feedback received, expected legislative developments and to avoid additional burdens on firms at this time” they had decided to not take forward plans. 

However, the statement also noted that the FCA would continue to “prioritise work to tackle non-financial misconduct”, which “can help to improve outcomes for markets and consumers and reduce harm”. 

The FCA and PRA initially consulted on proposed rules and expectations around diversity and inclusion for regulated firms in September 2023.

In the FCA consultation document at this time, it explained: “We consider that greater levels of diversity and inclusion can improve outcomes for markets and consumers. We have been clear that diversity and inclusion are regulatory concerns and, despite progress, research shows that there is more to be done to improve diversity and inclusion in the financial sector.” 

Proposed framework

A proposed regulatory framework would have established minimum standards and necessitated transparency on sector firms’ approaches to diversity and inclusion.

However, negative responses to the consultation from the insurance and wider financial services industries, as well as recent FCA noise around “streamlining regulation” have led to the proposals being dropped.

Commenting on the decision, Imogen Makin, counsel at WilmerHale, said: ”With the diversity and inclusion consultation, the FCA’s acknowledgement of the burden on firms from its existing rules is welcome, but diversity and inclusion is not a topic that should be forgotten by regulated firms. 

“As the Sexism in the City report by the Treasury Select Committee demonstrated last year, non-financial misconduct in the financial sevices sector remains an issue that needs to be addressed.”