In this edition of the UK Enforcement newsletter, we provide an update on recent anti-corruption and fraud developments, as well as economic crime issues in the UK. We consider recent regulatory and enforcement actions by the Serious Fraud Office (SFO), the Financial Conduct Authority (FCA), the Prudential Regulation Authority (PRA), the Metropolitan Police Service (MPS), and the Financial Reporting Council (FRC), as well as measures that have been taken as a result of the current geopolitical climate.
In respect of enforcement, governmental matters and legislative reform, we consider the following topics:
- Economic Crime (Transparency and Enforcement) Act 2022
- Law Commission publishes proposals for reforming corporate criminal liability
- Attorney General begins review into the SFO's handling of the Unaoil bribery case
- The SFO secures two fraud convictions against directors of Global Forestry Investments
- The SFO welcomes partial victory in ENRC case
- The MPS secures its first conviction for failure to prevent bribery
- PRA fines Standard Bank and Metro Bank for failings in their regulatory reporting
- The FRC transitions into the Audit Reporting and Governance Authority
- Regulation of Crypto-Asset Businesses
- Post-Brexit regulation of the UK's financial services
- Public Sector Fraud Authority established to tackle COVID-19 fraud
As part of our social commentary, we consider the following:
- Ongoing review of the proposed reforms to the Human Rights Act
- PRA and Bank of England's plan to improve diversity and inclusion in the financial services sector
Enforcement, Governmental Matters and Legislative Reform
Economic Crime (Transparency and Enforcement) Act 2022
In the wake of Russia's invasion of Ukraine on 24 February 2022, Prime Minister Boris Johnson announced that the Economic Crime Bill would be fast-tracked and introduced to Parliament on 28 February 2022. On 15 March 2022, the bill received Royal Assent, and the new Economic Crime (Transparency and Enforcement) Act 2022 (ECA 2022) was enacted into law. The ECA 2022 seeks to ensure that the ownership of property held in the UK is transparent, through measures such as establishing a register of overseas entities and their beneficial owners, amending financial sanctions law, and reforming the UK's Unexplained Wealth Orders (UWOs) regime to further empower criminal investigators. The Prime Minister also announced a new 'Kleptocracy Cell' based within the National Crime Agency, which has been created to target sanctions evasion and identify corrupt Russian assets hidden in the UK.
Taking each of these areas in turn, the ECA 2022 will introduce a Register of Overseas Entities, highlighting the ultimate beneficial owners of overseas companies which control property and land in the UK. This will bring the treatment of such overseas companies into line with that of UK companies, which have been required to declare beneficial ownership information since 2016. The aim of this measure is to prevent money laundering and sanctions avoidance by individuals using agents to create or purchase property on their behalf in the UK. Selling restrictions will be imposed on those who do not comply, and people found breaking the disclosure rules could face up to five years in prison. The registration requirements also apply to property bought by overseas owners up to 20 years ago in England and Wales, and from December 2014 for property in Scotland. Although Companies House is not yet ready for overseas entities to register, transitional arrangements mean that any companies holding property at the end of February 2022 will need to register once able, even if they have subsequently disposed of the relevant property.
In furtherance of increasing transparency, Companies House has separately released a White Paper setting out its proposals for reform, which include enhanced checks on persons of significant control over all legal entities, powers to query suspicious appointments and filings, and overall improvement of financial information held on its registers.
UWOs will also be reformed by further empowering investigators with increased time to prepare cases, and protection from incurring substantial legal costs provided they act reasonably and properly in their investigations. This is intended to permit investigations of those who manage properties within complicated offshore arrangements, in the hopes of identifying the ultimate beneficial owner. Since the inauguration of the UWO regime in 2017, only nine UWOs have been secured and these new powers will no doubt be welcomed by enforcement agencies. However, it is still unclear whether enforcement agencies can expect an increase in resourcing to flex these new powers.
Finally, the ECA 2022 has introduced a 'strict civil liability test' in relation to sanctions breaches. Previously, the Office for Financial Sanctions Implementation (OFSI) could only penalise an individual if they had actual knowledge or reasonable cause to suspect that sanctions had been breached. The OFSI will now be able to impose fines for sanctions breaches regardless of a party's knowledge of the breach, and will also be given a new power to publicly name firms that have breached financial sanctions but not received fines. This is particularly relevant in light of the UK's recent sanctions relating to Russia, with the UK government having imposed sanctions on banks with total assets of £500 billion, and oligarchs and members of their family with a net worth of over £150 billion.
These measures will be familiar to those who have followed the ECA 2022's progression through Parliament, with discussions of these measures beginning in 2018. It is hoped that having these measures enacted in law will support the UK's ability to investigate and trace illicit wealth, particularly in light of heightened sensitivities around corporate affairs involving Russia.
Given the pace at which sanctions are imposed by the UK government, now more than ever, firms should ensure that they have robust systems, controls and due diligence frameworks in place to avoid falling foul of sanctions regimes. To this end, on 17 May 2022, the FCA published a new platform encouraging the voluntary reporting of sanctions evasion or weaknesses in sanctions controls by individuals or firms registered at the FCA, and those with listed UK securities. The FCA is able to receive reports through various formats, depending on the source of the information and anonymity requirements. It is important to note, however, that while these reports will allow the FCA to build a more complex picture of conduct risk and develop policy going forward, firms and individuals must continue with the existing obligation to report sanctions breaches to the OFSI.
The Law Commission Publishes Proposals for Reforming Corporate Criminal Liability
In June 2022, the Law Commission published a series of options for reforming the law around corporate criminal liability. The Law Commission had been asked to look into this by the government, who had conducted their own consultation on this topic in 2017, but did not reach a conclusion.
The Law Commission presented ten options for reform. These options range from retaining the "identification principle" as the means of attributing criminal liability to corporates, to replacing the "identification principle" with a rule allowing conduct to be attributed to a corporation if a member of the corporation's senior management engaged in, consented to or connived in the offence.
Other options presented by the Law Commission involve extending the current "failure to prevent" model, by introducing a "failure to prevent fraud" offence as well as offences relating to "failure to prevent human rights abuses", "failure to prevent ill-treatment or neglect" and "failure to prevent computer misuse". The Law Commission did consider the possibility of a general "failure to prevent economic crime" offence, but rejected this on the basis that it would overlap with the current law and the breadth of the offence would make it difficult for companies to assess the procedures they would need in order to have a defence.
The Law Commission, although not making formal recommendations for reform, goes further than its last report on the topic in 2010, when it concluded that no reform was necessary. It is now for the Government to consider the options put forward and consider its next steps. Although there is no official timetable for this, the UK government made clear this year that it intends for there to be further legislation in the area of economic crime within the current parliament.
The SFO Secures Two Fraud Convictions Against Directors of Global Forestry Investments
On 31 May 2022, the SFO successfully prosecuted Andrew Nathaniel Skeene and Junie Conrad Omari, directors of Global Forestry Investments (GFI), a UK company which established three teak investment schemes in Brazil. Following a trial, the jury returned guilty verdicts against both directors for three counts of conspiracy to defraud and one count of misconduct in the course of winding up.
The charges relate to frauds concerning GFI between August 2010 and December 2015, during which the pair conspired to defraud over 2,000 investors out of approximately £37 million, by convincing them to invest in sham green investment schemes. Through the schemes, investors were to acquire a beneficial interest in individual plots of land containing around 100 young teak trees for between £5,000 and £6,500. Investors were told they would receive a rent that would represent approximately a 10% return on investment. All the schemes were promoted as low risk and socially responsible investments. Following GFI's compulsory liquidation in 2014, it was found that funds from the company had been misapplied and used instead to enrich the directors, rather than being returned to investors.
On 15 June 2022, the pair were sentenced to 11 years' imprisonment and disqualified from acting as directors for 10 years, reflecting the scale and gravity of their offending. This follows a seven-year complex investigation, which required the SFO to travel twice to Brazil, rely on mutual legal assistance from the Brazilian Ministério Público Federal, and conduct an extensive money tracing exercise, resulting in the Judge commended the SFO's "exceptional investigatory work". This case marks an important victory for the SFO, particularly in light of some of the challenges it has recently faced in respect of investigating and bringing individuals to trial.
Attorney General Begins Review Into the SFO's Handling of the Unaoil Bribery Case
On 9 February 2022, the Attorney General commissioned an independent review of the SFO's failings identified in the appeal of R v Akle and another  EWCA Crim 1879. In this case, the Court of Appeal allowed an appeal against the conviction of the defendant, Ziad Akle, due to disclosure failures on the part of the SFO, which the Court of Appeal held rendered the conviction unsafe. Furthermore, the Court of Appeal rejected a request from the SFO for a retrial, relying on the fact that the conviction had been quashed as a result of the prosecutor's behaviour. More recently, on 24 March 2022, the Court of Appeal overturned the conviction of a further defendant, Paul Bond, relying on these same grounds, and as of 8 June 2022, a third convicted former manager has launched an appeal against conviction which is likely to follow a similar course.
The SFO has been engaged in a significant investigation of the Unaoil group of companies (Unaoil) since July 2016, which extended to various individuals connected to Unaoil, including Ziad Akle, who pleaded guilty in relation to his role in the bribery scheme (as previously discussed in our April 2021 Enforcement Update). Paul Bond was convicted of two counts of conspiracy to give corrupt payments on 24 February 2021, following a linked trial. The appeals against both convictions largely turned on the SFO's failure to disclose material in respect of its own conduct, which had the potential to embarrass the SFO. The Court of Appeal concluded that the SFO's failure to disclose this key evidence at the original trial meant that the defendants did not receive a fair trial, which unfairly led to convictions for bribery.
In response to the successful appeal in respect of Akle, the UK Attorney General has launched an independent review of the issues highlighted by the Court of Appeal, including disclosure failings at the SFO. The review will be led by Sir David Calvert-Smith, a former Director of Public Prosecutions and High Court judge, and will seek to answer the following questions:
- What happened in this case and why? In particular, assessing
two key failings identified in the judgment:
- what occurred as regards SFO contact with third parties and why; and
- why did the SFO disclosure failures identified in the Court of Appeal judgment occur?
- What implications, if any, do the failings highlighted by this case have for the policies, practices, procedures and related culture of the SFO?
- What changes are necessary to address the failings highlighted by the judgment and any wider issues of SFO policies, practices, procedures or related culture identified by the reviewer?
It is encouraging that an independent review is being conducted over disclosure failings that the Court of Appeal referred to as "a serious failure by the SFO to comply with their duty". Sir David's report is due to be submitted to the Attorney General by the end of June 2022, who will then update Parliament on his findings and the UK government's response.
The SFO Welcomes Partial Victory in ENRC Case
On 16 May 2022, the Commercial Court handed down judgment in the high-profile trial between ENRC, Dechert LLP (Dechert) and the Serious Fraud Office (SFO). Mr Justice Waksman ruled partially in favour of ENRC's claims, in a court battle that has involved several lawsuits and a nine-year criminal investigation.
ENRC's claims concerned events which took place between 2011 and 2013 and related to the mining company's internal investigation into certain operations it was running in Kazakhstan and Africa. It also referred to the company's engagement with the SFO over allegations of fraud, bribery and corruption. Dechert acted for ENRC in relation to both matters.
The court made findings of "almost unimaginable" misconduct by Dechert, in relation to leaks of ENRC's privileged and confidential information as well as the exchange of unauthorised contact with the SFO. ENRC also succeeded in establishing breach of duty by Dechert, who the judge found negligently, and for the most part deliberately and recklessly, provided wrong advice to ENRC about potential liabilities.
Although it was determined that the SFO was not responsible for leaking confidential information, Waksman J ruled that the agency had acted improperly in relation to information communicated to it by Dechert. However, the judge established that this was motivated by "bad faith opportunism" rather than a desire to assist Dechert to generate more fees, and it was concluded that the SFO would have opened its investigation regardless of the leaks.
This partial victory will be welcomed by the SFO, providing some relief at a time where the agency is being independently reviewed for its handling of the high-profile Unaoil bribery case. However, ENRC has said it will be seeking multi-million pound losses against both Dechert and the SFO, which will be determined in a subsequent trial on issues of causation, loss and damages.
The MPS Secures Its First Conviction for Failure to Prevent Bribery
On 14 April 2022, a group of individuals and corporate bodies were sentenced at Southwark Crown Court for their involvement in bribing Noel Corry, a former senior manager at Coca-Cola Enterprises UK Ltd (CCE). This marks the first conviction by the Metropolitan Police Service (MPS) against a company for the criminal offence of failure to prevent bribery.
Between 2004 and 2013, Corry provided Boulting Group (Boulting), Tritec Systems (Tritec) and Electron Systems (Electron) with confidential information that gave them an advantage when bidding for lucrative electrical contracts with CCE. Corry also awarded "bogus" contracts to the companies, where little or no work was actually carried out. In exchange, Corry accepted bribes totaling at least £1.5 million in the form of cash, free tickets to sports and entertainment events and sponsorship of his local football club, Droylsden FC.
Whilst CCE was "wholly unaware" of Corry's conduct, the court found that the contracting companies had failed to put adequate compliance procedures in place to prevent bribery.
The individuals involved were handed suspended sentences, ranging between 12 and 20 months, and all ordered to carry out 200 hours of unpaid work. The contracting companies were fined, with Boulting ordered to pay £500,000 and Tritec and Electron £70,000 each.
Whether this conviction marks a new focus of the MPS on corporate corruption is yet to be seen. However, when discussing this case, Head of Economic Crime at the Metropolitan Police, Detective Superintendent John Roch highlighted the role of the MPS's Economic Crime Command division in investigating serious and complex financial crime, fraud and money laundering and the distinct areas of expertise of the detectives within that unit.
PRA Fines Standard Bank and Metro Bank for Failings in Their Regulatory Reporting
In December 2021, the PRA imposed financial penalties against two banks for failings in respect of their regulatory reporting, highlighting in particular the importance of complying with Fundamental Rule 6 of the PRA Rulebook, which requires firms to organise and control their affairs responsibly and effectively.
On 20 December 2021, the PRA imposed a £46.55 million penalty on Standard Chartered Bank (SCB) for failing to be transparent and cooperative with the authorities and for repeatedly misreporting its liquidity position. This is the largest fine the PRA has ever imposed in a case where it was the only enforcing body. At the time, SCB was temporarily subject to additional and tailored liquidity requirements because the PRA was concerned about an increased risk of US dollar outflows, and the bank was obliged to report daily to the PRA in relation to this. However, the PRA declared that the bank made five errors in its filings between March 2018 and May 2019, caused by ineffective internal controls and governance arrangements. As a result, the PRA was unable to form a reliable overview of the bank's US dollar liquidity position. In addition to breaching Fundamental Rule 6, the PRA considered that the bank did not comply with Fundamental Rule 7 in failing to be transparent and cooperative with the regulator, only notifying the PRA of its errors following a four-month internal investigation.
On 22 December 2021, the PRA also imposed a financial penalty of £5.3 million on Metro Bank Plc for failing to meet the expected standards of governance and controls after the bank revealed an accounting mistake in 2019, which led to the misreporting of the value of its commercial loan portfolio. In addition to Fundamental Rule 6, the PRA ruled that Metro Bank breached Fundamental Rule 2 as it failed to conduct its business with due skill, care and diligence.
Both banks qualified for a 30% reduction to their penalties after agreeing to resolve flaws in governance arrangements and systems and controls, highlighting the importance that the regulator places on remediation efforts.
The FRC Transitions Into the ARGA
Last year, we wrote about a consultation initiated by the Department for Business, Energy and Industrial Strategy (BEIS) which published proposals aimed at restoring trust in audit and corporate governance. This was in response to a series of high-profile corporate collapses in which the quality of audits was called into question. One of the proposals that has been adopted is for the UK's current audit regulator, the Financial Reporting Council (FRC), to transition into the Audit Reporting and Governance Authority (ARGA), which will be tasked with overseeing auditing practices and granted statutory powers to investigate misconduct and enforce reporting obligations against individuals within certain firms. The FRC currently has no such investigative or enforcement powers over individuals, including directors of firms, who are not members of the accountancy or actuarial professional bodies.
On 18 January 2022, the FRC published a consultation on its three-year plan as it prepares to transition into the ARGA. In 2022/23, the FRC expects its overall costs to increase by £9.1 million. It anticipates similar growth in 2023/24, being the year in which it is expected that the ARGA will be created, and the first year of statutory funding, followed by a period of stability and consolidation from 2025 onwards, with the ARGA largely being funded by a mandatory levy on the audit industry.
As well as detailing expected costs, the FRC set out its key priorities across its four divisions: Regulatory Standards, Supervision, Enforcement and Corporate Services. In preparing for its transition into the ARGA, and continuing its efforts across these divisions, the FRC has made clear that it remains committed to being an effective and transparent regulator, with sufficient powers to execute its functions in the interim.
Regulation of Crypto-Asset Businesses
As we reported in our previous newsletter, the FCA has increasingly focused on its responsibility to regulate crypto-asset businesses and is intent on protecting consumers from these high-risk investments (and sometimes scams), as well as combatting the risks of such assets being used for money laundering.
The FCA has been operating a temporary registration regime for crypto-asset business which was due to end on 31 March 2022 and allowed firms to continue trading, pending the outcome of their applications to register under the MLR 2017. However, as decisions remain outstanding in respect of a number of applications, the FCA has confirmed that 12 companies will be able to continue trading under further temporary licences. The FCA has emphasised that this applies to only a small number of firms and explained in early March 2022 that it had refused a quarter of the applications it received, where businesses did not meet the minimum standards of the MLR 2017.
In order to assist consumers further with assessing the legitimacy of crypto-asset transactions they are considering undertaking, the FCA has published a searchable list of unregistered crypto-asset businesses, which is updated on a daily basis. During the period April to September 2021, the FCA added 172 businesses to the list. The FCA also identified that since the list was first published, 110 businesses which had been listed have stopped trading in the UK, demonstrating its credentials in protecting consumers.
Separately, the FCA has announced that over the course of six months between April and September 2021, the regulator opened 300 cases relating to unregistered crypto-asset businesses and as of the beginning of March 2022 had 50 live investigations into unauthorised businesses.
The FCA has also specifically flagged to consumers that all crypto-currency cash machines (crypto-ATMs) operating in the UK are doing so illegally, as no company offering crypto-ATM services in the UK have been granted licences to operate. This followed a recent decision of the Upper Tribunal against Gidiplus, a company offering crypto-ATM services, which is in the process of appealing against the FCA's decision to refuse its application for registration under the MLR 2017. Gidiplus had asked the Upper Tribunal to allow it to continue trading, pending the appeal before the Upper Tribunal. However, the judge concluded that it was unclear how Gidiplus would undertake its business "in a broadly compliant fashion" going forward and so it would not be able to trade in the interim. It is understood that there are around 80 functional crypto-ATMs in the UK, and the FCA has announced that it will be contacting all operators of such ATMs, instructing them to shut down or face further action.
Additionally, the FCA is looking at financial marketing of crypto-assets, in anticipation of crypto-assets being brought within the scope of the financial promotions which are already regulated by the FCA. In January 2022, the FCA proposed further rules on how such high-risk financial products are marketed, to require improved risk warnings and to ban incentives such as "refer a friend" bonuses. The proposals are expected to be finalised by the end of summer 2022.
It remains clear that the FCA is very focused on this sector and will continue to be during the remainder of this year. We expect to see further action from the FCA in this sphere in the coming months.
Post-Brexit Regulation of the UK's Financial Services
Following the UK's departure from the European Union (EU), the UK government has expressed its intention for the UK to continue to be a thought leader in the development of international standards for financial services. As such, HM Treasury established the Future Regulatory Framework (FRF) Review to determine how the financial services regulatory framework should adapt to the UK's new position outside of the EU and ensure that the framework is fit for the future.
The FRF Review, conducted in November 2021, concluded that the UK's existing framework, the Financial Services and Markets Act 2000 (FSMA) model, remains the most appropriate way to regulate financial services in the UK. Under the FSMA model, the FCA and PRA are responsible for setting regulatory standards, working within an overall policy framework set by the government and Parliament. However, the FRF Review has set out proposals for both authorities to receive significantly broader policy-making powers to allow them to make rules covering all areas of financial services regulation that is currently only retained in EU law.
In order to balance the delegation of such significant powers, the FRF Review proposes enhanced mechanisms for accountability, scrutiny and oversight by HM Treasury over the regulators. In practice, this would require formalising through statute the mechanisms through which the regulators provide information to HM Treasury, as well as implementing measures whereby HM Treasury could require the regulators to review existing rules, if it were in the public interest to do so.
It is notable that the FRF Review has outlined proposals that are premised on growth and competition, intended to promote UK financial services. The apparent intention here is to maintain the UK as a world-leading financial hub supported by new technologies, with a focus on green finance and ambitions to achieve a net zero economy by 2050. The proposals will require further consultation with key stakeholders throughout 2022, and it will be interesting to see how the proposals take shape and develop into legislation that is aimed at ensuring the UK maintain a "coherent, agile and internationally-respected approach" to financial services regulation.
Public Sector Fraud Authority Established to Tackle COVID-19 Fraud
On 23 March 2022, the UK's Chancellor of the Exchequer announced that £48.8 million would be set aside from the UK's annual budget in order to establish a new public body to counter significant losses suffered as a result of fraudulent claims related to COVID-19 state-backed business schemes.
The Public Sector Fraud Authority has been established with the intention of bolstering efforts to reduce fraud and error, bring fraudsters to justice, and recover millions of pounds that were lost in various support schemes. The reported figure of loss is however, significantly higher than this, reaching estimates of £4.9 billion being lost through business support loans alone. The estimated loss from fraud and error across all COVID-19 state-backed business schemes is expected to be at least £15 billion.
Until the announcement of the new public body, the responsibility for investigating and prosecuting economic crime has fallen to several law enforcement agencies, including Her Majesty's Revenue and Customs, the National Crime Agency and the SFO. This approach has, as noted by several Ministers, allowed for the investigation of fraud in particular to become relegated to a host of competing priorities that these agencies are also responsible for. It is likely that the Public Sector Fraud Authority has been established to respond to this issue, in providing for a single law enforcement agency tasked solely with tackling fraud, particularly in light of a "growing fraud epidemic" that worsened significantly during the pandemic.
It is encouraging that efforts and resources are being directed towards tackling fraud, however, it will be interesting to see how the new agency cooperates and interacts with existing enforcement agencies, and whether it does indeed have the teeth to carry out its functions as intended by the government.
Ongoing Discussions About the Human Rights Act
The UK government has conducted a series of consultations aimed at reforming the Human Rights Act 1998 (HRA 1998), which was introduced in order to enable Britons to bring human rights cases in UK courts rather than having to take them to the European Court of Human Rights (ECHR) in Strasbourg. In 2019, the Conservative party pledged to update that legislation to ensure balance between the rights of individuals on the one hand, and national security and effective government on the other. In 2021, we reported that the UK government established the Independent Human Rights Act Review (IHRAR), which considered evidence from 150 individuals and entities in respect of the impact and efficacy of the Human Rights Act.
The IHRAR's report was published in December 2021, and overall, it found that the HRA 1998 was largely considered to be a success and did not require radical overhaul. Instead, it made several recommendations to enhance the scope of the HRA 1998, including clarifying the relationship between domestic courts and the ECHR, as well as addressing the extraterritorial scope of the HRA 1998.
Alongside the publishing of the IHRAR's report, the Ministry of Justice launched a further consultation on proposals that extend the scope of the IHRAR's recommendations, including through the introduction of a permission stage for human rights claims, in which claimants must prove that they have suffered "significant disadvantage." The proposals also limit the instances in which public authorities are held accountable for human rights violations, as well as limiting the extraterritorial scope of the Act.
The proposals have been met with criticism, not least because they appear to depart significantly from the IHRAR's report and recommendations. I. Stephanie Boyce, president of the Law Society of England and Wales, responded to the proposal as undermining "a crucial element of the rule of law, preventing people from challenging illegitimate uses of power." Worryingly, there is a distinct absence of evidence for some of the more radical proposals, such as a lack of data and costings in respect of claims that current legislation places positive obligations on public authorities to protect the human rights of individuals which are costly. Overall, it is concerning that the proposals are likely to reduce legal certainty, increase costs and complexity for both claimants and respondents, and ultimately, damage the UK's reputation for upholding and defending fundamental human rights. We will continue to monitor the response to such proposals closely.
Regulators Show Increased Focus on Diversity and Inclusion in the Financial Services Sector
In our October 2021 edition, we reported on the discussion paper published by the FCA, PRA and Bank of England, which set out regulatory plans to improve diversity and inclusion in the financial services sector. Themes that were tabled included the use of targets for representation, measures to make senior leaders directly accountable for diversity and inclusion in their firms, linking remuneration to diversity and inclusion metrics and the regulators' approach to considering diversity and inclusion in non-financial misconduct.
In January 2022, the PRA issued a "Dear CEO" letter in which it confirmed that it had received positive feedback from the industry in respect of those proposals. It went on to acknowledge that while change can take time, it expected firms to consider the themes set out in the discussion paper, and challenge themselves to understand their gaps and consider where they can make progress.
In a further move, the FCA published a policy statement in April 2022, in which it set out a number of measures to improve transparency on the diversity of company boards and their executive management. Amongst other things, the FCA will require firms to disclose information relating to the representation of women at board and executive management levels. The FCA made clear that, in complying with this requirement, companies may report on the basis of sex or gender identity, thereby including those self-identifying as women.
It is clear from these developments that while diversity and inclusion are topics that are in their relative infancy for certain firms, the conversation is continuing to evolve. Building and maintaining a diverse workforce is evidently a responsibility that has been placed firmly within the remit of senior management, and it is encouraging that firms are being asked to challenge the status quo and consider ways in which to improve gender, ethnic and socioeconomic representation at senior levels in the financial sector across the UK. However, it is clear that much more needs to be done.
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