# Top City watchdogs drop new diversity and inclusion rules for firms

## Bank of England

### The Bank of England in London.

**Announcement comes after 2024 report found ‘not much’ had changed in regards to gender inequality in financial services.**

**Photograph: Tayfun Salcı/Zuma/Rex/Shutterstock**

### By Joanna Partridge
**Wed 12 Mar 2025 09.29 EDT**

First published on Wed 12 Mar 2025 08.00 EDT

The City’s top two regulators have said they will not bring in new diversity and inclusion rules for financial firms because they want to avoid imposing extra “regulatory burdens” and costs, in the latest sign of a retreat from efforts to help underrepresented groups.

The Bank of England’s regulatory arm, the Prudential Regulation Authority (PRA), and the  (FCA) said they would instead support “voluntary industry initiatives” aimed at boosting diversity and inclusion in the financial sector.


*Announcement comes after 2024 report found ‘not much’ had changed in regards to gender inequality in financial services. Photograph: Tayfun Salcı/Zuma/Rex/Shutterstock*

The announcement coincides with a  of diversity, equity and inclusion (DEI) policies that has accelerated under Donald Trump, and with a push by the UK government to reduce regulation to help stimulate economic growth.

Sam Woods, a deputy governor at the Bank who leads the PRA, wrote in a letter to Meg Hillier, the chair of parliament’s Treasury committee, and the FCA’s chief executive, Nikhil Rathi, were choosing to “remain alert to the risks of groupthink” within its existing supervisory framework rather than asking companies to report what measures they were taking to improve representation of women and minorities in their organisations.

The move comes after an , by the influential Treasury committee, which examined barriers faced by women in financial services, and looked into whether progress had been made on the gender pay gap, stigma against working mothers, and the sector’s “alpha male” culture.

The committee renewed a 2018 inquiry into gender inequality in financial services, after a spate of sexual harassment allegations that rocked the business world, and explored what role regulators, including the FCA, should play in “combating sexual harassment and misogyny”.

However, a March 2024 report found that “not much” had changed in the intervening period, and it welcomed proposals by the PRA and the FCA to strengthen their non-financial misconduct rules and improve their ability to take action against perpetrators of sexual harassment.

In the letter, Woods wrote that the PRA and FCA – which also  on Wednesday – believed diversity and inclusion initiatives could benefit firms.

“We continue to think that an appropriate focus on diversity and inclusion in the culture of the firms we regulate can deliver improved internal governance, decision-making and risk management,” Woods wrote.

He added that such focus “can support both safety and soundness – through reduced risk of groupthink – and the competitiveness of UK financial services over the medium to long term”.

However, after consultations with the companies it regulates, and with the Treasury committee, Woods said that financial firms did not want regulators to introduce new rules including gender and ethnicity pay gap reporting, at a time when the government was .

“Many of those who responded to our consultation wanted us to align our regulatory approach with related initiatives, to avoid duplication and unnecessary costs,” he wrote, in a move that could be interpreted as a response to the government’s call for .

Woods 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.”



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