The financial institutions results from the Global Directors´ and Officers’ Survey, published annually by WTW, a multinational insurance services company, show that, in the finance sector, corporate directors and executives believe cyberattacks still pose the most significant risk to their organizations this year. “However, strikingly for the first time this year we see health and safety coming in as a very close number four, with 83% of financial services and insurance respondents identifying it as a risk concern (compared to only 35% in last year’s survey).”

One trend that may be influencing the results in the financial services industry, the report says, “is the focus on non-financial misconduct in the industry and a recognition that such behaviour can impinge on well-being as well as financial results.”

While not appearing in the top seven risks for financial services and insurance, this year’s survey nonetheless indicates an increasing concern in respect of employment claims (57% identifying it as a risk concern compared with 36% last year). This is echoed by increasing concern about the breach of human rights within or by business operations (64% this year, up from 42% last year) and all other social factors featuring as questions in this year’s survey. According to the report, “this arguably in part reflects regulators’ increasing interest in non-financial misconduct.”

In 2018, the Women and Equalities Committee of the UK Parliament published its report on sexual harassment in the workplace, leading the UK's financial conduct regulator, the Financial Conduct Authority (FCA) to explain the basis on which it sees sexual misconduct as falling within the scope of the regulatory framework. The FCA has also brought a number of cases against individuals whose non-work-related conduct was deemed to affect their integrity such that they could not be considered “fit and proper” to work in financial services. The FCA has placed increasing weight on the role of culture in recent years – for example in a ‘Dear CEO letter’ to insurance firms in January 2020, the FCA identified non-financial misconduct and an unhealthy culture as a key root cause of harm.

The letter stated that “We view both lack of diversity and inclusion, and non-financial misconduct as obstacles to creating an environment in which it is safe to speak up, the best talent is retained, the best business choices made, and the best risk decision taken.”

This issue is not abating, the WTW report says, “and firms may be coming to appreciate that there is a correlation between culture and employee well-being. Specifically, the impact on employees’ health and well-being within a culture which tolerates bullying and discrimination.”

In July 2023, the UK House of Commons Treasury Committee (TC) called for evidence on the barriers faced by women in financial services as it launched an enquiry into sexism in the city, examining the progress made in removing gender pay gaps and what role firms, the government and regulators should play in combatting sexual harassment and misogyny.

The report, published in March 2024, concluded that there have been “incremental improvements for women working in financial services on certain metrics, such as the proportion of women holding senior roles. Overall, there has been a disappointing lack of progress on sexual harassment and bullying, including serious sexual misconduct. Despite the best efforts of some far too little progress has been made and serious problems which should have been rooted out still persist.”

Addressing these issues is a key regulatory focus and both of the UK regulators, the FCA and the Prudential Regulatory Authority (PRA), with both confirming that they have issued proposals to require certain firms to provide data, with a view to understanding how cases of non-financial misconduct are resolved. “We will be carefully monitoring the proposals. In the meantime, directors may wish to satisfy themselves that their D&O and E&O policies cover regulatory investigations and consider employment practices liability insurance,” the report concludes.