The City watchdog is proposing to toughen its “fit and proper persons” test to crack down on workplace misconduct in an effort to make the finance industry a safer work environment for women.
In a consultation paper to be published on Monday, the Financial Conduct Authority will put forward stricter rules against abusers and regulated firms that may have failed to punish offenders.
The move follows a string of sexual harassment allegations in the City, which have included claims made against the hedge fund tycoon Crispin Odey.
The FCA’s proposed rule change will raise questions about whether the previous regime has been strong enough and implemented effectively.
In June, MPs on the powerful Treasury select committee wrote to the FCA to question the City watchdog’s supervision of Odey and his firm. In response, the regulator said it was investigating whether Odey, a multimillionaire Conservative donor and one of the City’s most prominent investors, was a “fit and proper person” to work in financial services.
The potential new rules are thought to also include guidance around how City workers can be struck off for failing to meet the regulator’s “fit and proper” test for non-financial misconduct offences. Many City workers and firms require FCA authorisation to do business.
Nikhil Rathi, chief executive of the FCA, told the Sunday Telegraph: “Financial services workplaces need to be safe places for women.
“Companies that do not have an environment where serious issues like that are dealt with and addressed are unlikely to be companies that have an environment which is healthy from a risk management perspective. We want to make sure that we are proactive around that.”
In June, 13 women accused Odey of abuse or harassment over decades, in a detailed investigation by the Financial Times. Odey denies the allegations.
Following the claims, the hedge fund manager’s firm, Odey Asset Management (OAM), announced that it would be broken up after investors began rushing to withdraw their funds.
OAM had hoped that ousting Odey and removing his name from the business would quell unrest among investors and financial partners. However, they continued to pull their money out, forcing the company to block withdrawals from some funds as investors tried to take out more than 10% of the total value.
The FCA’s remit is set by legislation, giving it the power to set rules in certain areas for regulated businesses and workers. The new consultation, which will be open to firms, trade associations and the public, will set out potential new rules and fresh guidance on how those rules might be implemented.
