How many NDAs have you signed? FCA approaches insurers and intermediaries as first recipients of its Non-Financial Misconduct Survey

The FCA has this week issued a notice to insurers and insurance intermediaries compelling them to provide it with data about non-financial misconduct within their organisations. This is the survey announced by Sarah Pritchard during her evidence to the Treasury Committee on 17 January which we wrote about in our earlier "Non-financial misconduct – further warning shots fired". The same request for information is anticipated to follow shortly for banks and brokers.

The FCA’s request is for the provision of data for 2021, 2022 and 2023 setting out the number of incidents of non-financial misconduct recorded. The FCA also expects firms to indicate the method by which these incidents were detected (for example whistleblowing) and the outcomes. 

In addition to immediate outcomes such as written warnings, or complaints not being upheld, the FCA expects statistics on the number of “further outcomes” recorded, which may include references to employment tribunals. Significantly, it will also include the number of non-disclosure agreements (NDAs) used. The volume of NDAs being used was a topic of focus at the Treasury Committee meeting last month, as the political scrutiny of the use of NDAs has been especially acute following recent scandals in which it is alleged NDAs may have been used to silence victims of misconduct.

The FCA’s letter explains that it expects to receive data not only relating to incidents occurring at the office, while working from home or working offsite, but also any which may have occurred during social situations at work, at client entertainment and at sponsored events. In short, at any situation that has some connection to work.

As we noted in our previous update, this recent information gathering exercise fits with the FCA’s image of itself as a “data-led” regulator. The FCA hopes that the responses to this survey will provide information on the prevalence of non-financial misconduct and the methods by which it is being tackled. This should help the FCA to improve the way it regulates these issues, supporting its clear statement that non-financial misconduct is misconduct. 

Combined with the upcoming changes to its D&I proposals, the FCA has a clear intention to highlight and address unacceptable behaviours so as to foster better culture and governance at regulated firms. After all, good governance and diversity of thought should promote better outcomes for both businesses and their clients.