In a major win for workplace free speech, the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have abandoned plans to impose new diversity and inclusion (D&I) rules on financial firms after strong pushback, including a detailed consultation response from the Free Speech Union (FSU).
This decision affects a vast number of businesses. The FCA regulates the conduct of around 45,000 firms, while the PRA oversees around 1,500 banks, building societies, credit unions, and insurers. Had the proposals gone ahead, they would have placed sweeping new obligations on a significant portion of the UK’s financial sector.
Back in January 2024, the FSU responded to two parallel consultations (here and here), warning that the FCA’s proposal to treat a “lack of diversity and inclusion” as a “non-financial risk” would have serious consequences for free speech in the workplace.
Our response to the FCA consultation was submitted via its online portal, but you can read the letter we sent to the PRA by clicking here.
The principal concern was that one of the most obvious ways for regulated firms to comply with the proposed new requirement would have been to entrench politically contentious D&I policies even further, which we know from our casework subtly serves to create pressure to silence dissenting views, expand ideological training schemes, and punish employees for lawful but unfashionable opinions.
That’s why, in our submission, we made a clear distinction between the theory and practice of diversity and inclusion in British workplaces.
While these initiatives are often framed as fostering better decision-making, in reality, they frequently reinforce groupthink rather than challenge it. Many firms rely on unregulated external diversity and inclusion providers, who propagate a homogenous way of thinking and promote ill-defined concepts such as ‘equity’, which then become entrenched in company policies. This has created a climate where employees feel unable to challenge prevailing ideologies without fear of professional consequences.
Approximately one in 20 of the 3,500+ cases the FSU has taken on since 2020 relate to inclusion and diversity training in the workplace. Where these cases have reached a conclusion, we have prevailed in over 70% of them, demonstrating how frequently these policies are misapplied or even unlawful. Employees have been penalised for rejecting ideological claims presented as fact, particularly in relation to critical race theory, gender identity ideology, and other aspects of identity politics.
We also challenged the PRA’s reliance on ‘unconscious bias training’ and ‘anti-racism training’ as supposed solutions to groupthink in the financial sector. Our research has shown that such training is ineffective and may even increase workplace discrimination.
These findings align with the report of the Inclusion at Work panel commissioned by then-Minister for Women and Equalities, Kemi Badenoch. Based on interviews with 100 individuals from 55 organisations, the panel found no clear evidence that D&I interventions achieve their stated objectives.
In December 2020, the government-backed Behavioural Insights Team (BIT), which was established to apply psychology to public policy, reached a similar conclusion. Its review of unconscious bias training found “no evidence that this training changes behaviour in the long term or improves workplace equality” in terms of representation of women, ethnic minorities, or other minority groups. On that basis, BIT recommended it be phased out across Whitehall.
Yet despite this growing body of evidence, both the FCA and PRA were prepared to push ahead with policies that would have embedded these discredited approaches even further.
Now, in a letter to the Treasury Select Committee, the FCA has confirmed that, after “carefully considering” the feedback, it will not introduce new rules on D&I. The regulator acknowledged concerns over duplication with upcoming government policies and the unnecessary costs associated with mandatory data collection. Instead, it will limit its role to “supporting voluntary industry initiatives”. The PRA has also confirmed it will not proceed with its proposals.
This is a major backtrack. Rather than revising or tweaking the proposals, the FCA and PRA have abandoned them, implicitly acknowledging that the financial sector does not need or want regulatory compulsion to promote EDI. It’s a clear signal that ideological ‘diversity’ mandates should not come at the expense of free expression and open debate in the workplace.
The FSU has successfully helped to block yet another attempt to impose political conformity under the guise of corporate governance. Needless to say, we will continue to oppose any future attempts to impose ideological conformity on institutions, financial or otherwise.
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