Chancellor urged to Review FCA Diversity Proposals for Potential Overreach

A letter signed by 40 MPs and peers says the financial regulator’s proposals ‘promote pseudoscience and gender ideology’ and may overreach the FCA’s remit.
Chancellor urged to Review FCA Diversity Proposals for Potential Overreach
Chancellor of the Exchequer Jeremy Hunt departs 11 Downing Street in London on Sept. 13, 2023. (Aaron Chown/PA)
Lily Zhou

Chancellor of the Exchequer Jeremy Hunt was urged on Tuesday to review the Financial Conduct Authority’s (FCA’s) proposals on diversity for potential overreach.

In a letter sent to the chancellor, 40 MPs and peers, including former Prime Minister Liz Truss and former home secretaries Suella Braverman and Priti Patel, said the regulator may have stepped outside of its remit.

Under the proposals, which were published in a consultation last year, large businesses of 251 employee or more regulated by the FCA will be required to report employees’ demographic data, including age, ethnicity, religion, disability, and sexual orientation; and encouraged to report data on gender identity, socio-economic background, and parental and carer responsibilities.

Firms are also required to choose either sex or gender as one of the mandatory categories.

The requirement is based on the belief that one can have a gender identity that’s different to biological sex.

The FCA also proposed requiring firms to set diversity targets, recognise a lack of diversity and inclusion as a “non-financial risk,” and encourage them to set additional inclusion targets.

The letter, signed by 22 Conservative MPs and 18 peers, says the concept of “gender identity” has “no basis in science or law,” adding, “A government quango surely has no remit to promote contested ideology.”

“The FCA’s proposals promote pseudoscience and gender ideology to the detriment of science, reason, and women’s rights while taking an activist approach to EDI [equality, diversity, and inclusion],” the letter reads.

“We would like you to explore whether the proposals over-reach the FCA’s remit or are at odds with its Public Sector Equality Duty.”

The parliamentarians argued that “gender” is not a protected characteristic in the Equality Act, and that recording demographic data on “gender” rather than “sex” will prevent firms from being able to “monitor a whole range of metrics that women care about in the workplace.”

They also questioned whether the FCA has the authority to require firms to report on these data and set diversity targets.

“Does the FCA have the authority to do this? There is growing concern that group/identity markers are fuelling ‘inter-group’ tensions rather than reducing them. This is not compatible with the Public Sector Equality Duty in the Equality Act which require entities to foster good relations,” the letter reads.

The signatories argued that growing bureaucratic requirements may “directly impact performance, run the risk of deterring companies from listing on the London Stock Exchange,” and the proposals will “shift even more of our economic resources towards box-ticking and bureaucracy and away from meaningful economic output that actually improves lives.”

They asked Mr. Hunt to review the proposals “with respect to over-reach of the FCA’s remit, EDI over-reach, excessive bureaucracy/compliance for firms, risks to UK competitiveness, and the promotion of gender ideology at the expense of women’s rights without any justifying remit.”

Referring to “disquiet about the over-reach of unelected quangos seemingly taking an ‘activist approach’ in the interpretation of equality law, EDI, and in other areas of their remit,” the letter says the comments also apply to the Prudential Regulation Authority, which ran a parallel consultation with the FCA on an almost identical set of rules for some 1,500 financial institutions that it regulates, such as banks and insurers.

In a statement emailed to The Epoch Times, a spokesperson for the FCA said: “Our consultation on diversity and inclusion, which has now closed, is aimed at tackling misconduct such as bullying and sexual harassment and supporting a well-functioning, internationally competitive financial sector, through reduced groupthink and unlocking talent.

“We are grateful for all feedback. We will consider responses and the conclusions of the Treasury Committee’s Sexism in the City inquiry and will report back later this year.”

A spokesperson for HM Treasury told The Epoch Times in an email, “The regulators are independent but we will look at any proposals very carefully.”