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Britain’s Finance Watchdog plans for diversity are a ‘bad idea’, minister says

Plans by Britain’s financial regulator to require companies to set targets for improving diversity could be counterproductive, British Business and Women Minister Kemi Badenoch said on Thursday.

The Financial Conduct Authority (FCA) and the Bank of England’s Prudential Regulation Authority (PRA) last September proposed guidance for financial firms to tackle sexual harassment and bullying, along with new requirements for major banks and insurers to set targets to improve diversity and inclusion.

“My role in particular as Minister for Women and Equalities often involves killing bad ideas,” Badenoch told a conference held by TheCityUK, a financial industry body.

Women in UK financial services earn a third less than male colleagues: data shows

“Sometimes it means doing things like writing to the FCA and PRA, as I did a few weeks ago, warning them about a proposed mandate on equality quotas,” she added.

Such a requirement is something the “law does not require and could be counterproductive,” she said.

The FCA said: “We have received the letter and will respond.”

Last month, parliament’s Treasury Select Committee said in its report on ‘Sexism in the City’ that regulators should drop their ‘prescriptive plans for comprehensive data reporting and target setting’.

Instead, regulators should focus their efforts on ensuring that companies’ boards of directors and senior leadership take greater responsibility for improving diversity and inclusion, the lawmakers said.

The FCA told the committee last month that it would consider the divergent views on setting diversity targets.

Badenoch told the conference she believed in the “social value” of financial services because it brings investment and makes people’s lives better.

“Regulation has shifted from protecting against fraud and system failure to everything from diversity to green finance. This ever-increasing tide of micromanagement will not necessarily make us or the financial market stronger,” she said.

TheCityUK published a report on Thursday calling for closer scrutiny of regulators to ensure their work supports the global competitiveness of the financial sector and UK economic growth.

(Reporting by Huw Jones; Editing by Barbara Lewis)

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