The FCA has found a sharp increase in non-financial misconduct complaints at regulated firms working in the wholesale financial sectors.

The complaints included bullying, harassment and discrimination.

An FCA survey of 1,000 regulated firms found a steady increase in incidents over the three year period covered from 2021 to 2023. The number of complaints rose from a total of 1,363 in 2021 to a near doubling to 2,347 in 2023.

In 2023 there were 7.9 incidents per 1,000 employees at wholesale banks, for example, compared to 5.1 in 2021.

Financial advisers and wealth managers are mostly not included in the survey which mainly focused on London market intermediaries, wholesale banks and wholesale brokers, many of them based in the City. 

The FCA said that in the three years covered by the new survey, bullying and harassment (26%) and discrimination (23%) were the most recorded concerns. However, it says a large 'other' group of concerns (41%) indicated, “how difficult it can be to categorise issues of personal misconduct.”

The regulator has today published the results of the survey of 1,000 investment banks, brokers and wholesale insurance firms and says it found the number of allegations increased between 2021 and 2023, a period partially including the Covid-19 lockdown.

The FCA says the results will help it to better understand how firms record and manage allegations of non-financial misconduct. 

The watchdog says that a high number of complaints may be a positive in that some employees may feel confident in these firms in bringing a complaint forward. A low reporting rate may indicate the opposite, it said. 

The FCA found that firms identified concerns through a variety of mechanisms although formal processes and whistleblowing were the most prevalent methods.

The regulator says it expects trade associations to play a key role in coordinating industry-wide analysis and actions.

Liz Field, chief executive at PIMFA, said: "We welcome the regulator’s decision to survey the information about recorded incidents of non-financial misconduct in financial services industry and thus shed more light on the challenges firms face when handling the instances of non-financial misconduct.

“In our response to the discussion paper on diversity and inclusion, we supported embedding non-financial misconduct into Fitness and Propriety assessments and the Conduct Rules. For our part, PIMFA will be developing guidance for our sector as firms need to be clear of their responsibilities.”

Sarah Pritchard, FCA executive director of markets and international, said: “We want this data to support financial firms by providing their management teams and boards with an opportunity to consider if they stand out, and, if so, why that might be.

“The data requires context and careful interpretation. But, in being transparent, we hope financial firms can benchmark themselves against their peers.

“Healthy workplace cultures are essential across all the markets we regulate – where non-financial misconduct is allowed to persist it can undermine trust and confidence, and create a culture where wrongdoing goes unchallenged, causing harm.

“We are grateful to see a number of trade bodies engaging with these findings. We look forward to continuing to partner with them to continue to raise standards.”

• FCA Report on Non-Financial Misconduct