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The Bank of England says it has decided against creating new rules on diversion and inclusion for the financial sector to avoid overwhelming firms with “regulatory burdens” amid a broader push for economic growth.
The Bank’s enforcement arm, the Prudential Regulatory Authority (PRA), revealed the decision on Tuesday in the wake of major US firms scrapping diversity goals following an attack on the workplace equality schemes by US president Donald Trump.
A letter from the watchdog’s chief executive, Sam Woods, to Meg Hillier, the chair of the parliament Treasury Committee, said the organisation would “remain alert to the risks of group-think” within the firms it manages, instead of asking them to report on how they were improving representation for women and people from ethnic minority backgrounds in their industry.
Mr Woods’ letter followed a parliamentary inquiry known as ‘Sexism in the City’ by the Treasury Committee in 2024, looking at misogyny in financial services. The committee returned to the topic after an initial inquiry in 2018 when the sector had been rocked by claims of sexual harassment.
Reflecting on whether the industry had made progress on the gender pay gap and the “alpha male” culture associated with the sector, the report found that only “incremental improvements” had been made.
In particular, there remained a “disappointing lack of progress on sexual harassment and bullying, including serious sexual misconduct.”
In Mr Woods’ letter, the PRA acknowledged that diversity and inclusion could help improve decision-making and risk management for firms, as well as benefiting the “competitiveness of UK financial services over the medium to long term.”
But firms consulted by the regulator said they were keen to “avoid duplication and unnecessary costs”, especially as the government was already planning to bring in new legal reporting requirements for companies.
“We note that there is now an active legislative agenda in this area, including on gender action plans and disability and ethnicity pay gap reporting”, Mr Woods’ letter read.
He added: “There is also a growing emphasis in our work on reducing regulatory burdens on firms while still delivering our objectives, and adding significant new requirements in this area could be seen as in tension with that approach.”
The watchdog chief’s emphasis on reducing “regulatory burdens” comes after chancellor Rachel Reeves’ urged regulators to tear down red tape to encourage economic growth.
The UK’s employment rights minister, Justin Madders, said last month he didn’t expect British businesses to follow the lead of US rivals rolling back diversity goals despite concerns over Trump’s agenda, which includes ridding the government workforce of diversity metrics.
Several large businesses in the US, including Google, Meta, Amazon and McDonald’s, have scaled back their diversity programmes following Mr Trump’s presidential election victory.
In the UK, Deloitte told its staff that it was “committed to our diversity goals” following reports of a changing focus in the US, while the boss of Barclays said the bank had an “unwavering” commitment to inclusion despite changes happening overseas.
Woods said in the letter that the firm wouldn’t publish any new rules on the topic or return to the question “until after the substantive implementation of any new legislation in this area.”