The financial services sector needs to look at the “cultural change” that the FCA is creating through its regulations surrounding equality, diversity and inclusion (EDI) rather than the regulations per se, the Chartered Insurance Institute has urged.

Matthew Connell, CII director of policy and public affairs and a regular columnist for Financial Planning Today magazine, said there had been too much focus on “prescriptive regulation” which can lead to “one-size-fits-all” rules.

Instead, he urged the industry to look at the wider statements that the FCA makes.

He said: “(It's) not just about EDI, but also about vulnerability, because it's in that interaction with clients and making that interaction meaningful.”

In a recent webinar on, ‘Crafting EDI strategies in an evolving regulatory landscape’, Mr Connell said: “There’s a huge amount of test-and-learn that's going on in terms of balancing out not just the needs of different protected groups, but also issues around intersectionality and how being a member of more than one protected group might change people's circumstances.”

He said: “The FCA sees the real heart of inclusivity and diversity, and how that can make a real difference for consumers and people working in financial services.”

He mentioned that in 2022 the FCA published a policy statement on the Consumer Duty where it said, “diversity is a lens that can help firms to better understand and meet the needs of their customers, including those in vulnerable circumstances.”

Mr Connell said there were practical benefits in firms exploring customer’s needs from different perspectives. “I think the encouragement in the Consumer Duty towards a culture of curiosity and learning, and applying specific solutions for specific consumers, especially through the lens of vulnerability, is at the heart of what the FCA is doing.

"If we only look at the rules the FCA is proposing, that means that we would be missing out on something very fundamental, and it would invite the wrong kind of regulation, followed up with more and more waves of prescriptive regulation that tends to be more one-size-fits-all.”

The CPD event, hosted by Vivine Cameron, EDI manager for the CII, was designed to help insurance and personal finance professionals approach the proposed FCA EDI Regulatory rules, as outlined by CP23/20. 

The ABI’s Janice Fordjour, policy adviser for prudential regulation, and Liisa Antola, senior policy adviser for diversity, equity and inclusion, also joined the webinar.

Janice Fordjour, said: “The ABI is very supportive of the efforts of the FCA and PRA and their work to improve diversity and inclusion across the financial sector.”

Ms Antola said: “We will continue to champion and support our members to deliver diversity and inclusion strategies that can make palpable change.”