Alongside the PRA and the Bank of England, the FCA is seeking views on regulatory plans to improve diversity and inclusion in financial services.
In particular, the FCA is concerned that lack of diversity and inclusion within firms can weaken the quality of decision-making.
A panel of influential experts, including the FCA's Georgina Philippou recently spoke at The Wisdom Council's webinar, The Culture Conundrum: unpicking inclusion and governance, to discuss the issues at hand - from the role of leaders, to having the right data to map and measure progress in addressing cultural challenges.
There is growing pressure on financial services firms to define the purpose of their business and demonstrate an inclusive, diverse culture.
Alongside the fact that the FCA is upping the ante, asset management firms have been put in the spotlight as ESG investing moves into the mainstream - how can firms hold investee companies to account if they have not fixed the culture in their own organisations?
Yet, while most firms acknowledge the challenges around culture, it is trickier to know what practical steps to take to shift the dial.
The Wisdom Council brought together the panel to discuss the practical implications of raising the bar on diversity and inclusion in financial services. Here's what they had to say.
The panel: chair Dawn Hyams, The Wisdom Council; Georgina Philippou, FCA senior adviser, public sector equality; Bev Shah, founder City Hive; Alexandra Stanton, lawyer, corporate culture consultant and Women in the COO ambassador; Natalie Gill, director of membership Women and Banking in Finance (WIBF); and Anna Lane, CEO The Wisdom Council and president of WIBF
On the purpose of the FCA's discussion paper
Georgina Philippou: We really want to move the dial. We would like to see more diversity and inclusion from regulated firms.
Ultimately, we want diversity and inclusion to result in better consumer and market outcomes.
We want better data collection and data use too. So, my plea to everybody is, read it and please respond.
Only by getting a diversity of responses will we, further down the line, produce a sensible consultation paper, and be in a position to introduce interventions later that really do move the dial.
Natalie Gill: As D&I practitioners, our responsibility is to keep the conversation alive.
The FCA taking such an active stance on this means that naysayers in our organisations have no choice but to listen - and they have to start talking.
From a cultural perspective, this is real progress.
On where cultural change should come from within your organisation
Georgina Philippou: We need a top down and a bottom-up approach. Arguably, we need a middle out approach as well.
From the top down you need the overarching principles on how you run your organisation.
You also need the bottom-up approach, so that you can create systems and processes and policies, which make good culture easy and bad culture hard.
Changing systems and processes and policies is easier than changing people or behaviours - so, you can use them to promote and drive a positive culture.
You also need a middle out approach. Your middle management is an incredibly influential group of people.
They can inspire the people who report to them, which are likely to be the majority of the staff. They can give you helpful challenge.
Bev Shah: People at the top have woken up.
There is only one direction of travel for diversity and inclusion and "the middle" are going to have to get on board at some point.
If they do not care about it philosophically, you need to think about how you make those people care.
Alexandra Stanton: After senior leaders, middle managers are the most influential people. We need to do more on how we can motivate them because we need to get them onside.
On what firms can do with data to quantify cultural challenges
Bev Shah: Let us not just hang our hats on pay gap reporting.
Start creating diversity data numbers across your organisation - not just looking at the staff you have but looking at your supply chains and the organisations you work with.
Georgina Philippou: Quantifying and measuring inclusion and culture is the million dollar question.
But I do think that you can sensibly use quantitative measures.
So, for example, who are your new starters, where are they coming from?
Who has been promoted? Who has had the pay rises and the really exciting project opportunities. Who is leaving and why are they leaving?
And then, of course, qualitative measures including staff surveys and social media and investors feedback that will help you build a coherent narrative on your company's culture and how inclusive you are.
Alexandra Stanton: Leaders really need to be honest.
When we start collecting this data, there will inevitably be some information that creates discomfort.
In my experience, what can sometimes happen is that senior leadership say, "well, it is not necessarily representative, it was just a very small population that mentioned that".
You can use that knowledge and actually turn it into quantitative data by asking very targeted questions to a large part of your population.
Natalie Gill: Data is really useful in highlighting missed opportunities [for change] and understanding what behaviours are driving those.
On overcoming product monoculture
Bev Shah: As an industry, if we are taking our role as stewards and TCF seriously, you need to look at your clients, the data on the diversity of our client base -- not just the high-net worth clients but everyone in society from the most vulnerable - how can you create a better product if you don't have them in your team to create that product?
And there is a huge gender data gap.
For example, if we are creating annuity products and we're only looking at the history of males and their finances, we have got a problem.
Anna Lane: The challenge for the asset management industry is it is so intermediated and the data is not readily available easily.
So, if you have got heavily-intermediated distribution, on the one hand you should be considering much more diversity when you create product but on the other, actually monitoring that can be very difficult.
On who does it best
Georgina Philippou: The best organisations consider diversity and inclusion as part of the business-as-usual piece.
They think about it from the very beginning from design and advertising, right through to complaints and compensation - not just someone putting a D&I lense on it just before they launch a product.
The best also might have customer boards from which they get feedback.
They make use of their NEDs who can add tremendous value, but you need to ensure that you have got diversity in your NEDs for that value to be fully realised.
Some even have shadow boards made up of more junior staff - so, there are lots of ways of making product design more inclusive.
You need diversity in the organisation to get diversity of thought.