Diversity and inclusion (D&I) are terms that are becoming increasingly common in UK society as a whole as well as in the financial services sector. But what do they mean, what do they mean to the mortgage sector and why should they be important to you?
The financial services regulators (FCA, PRA and Bank of England) have recently published a joint discussion paper on diversity and inclusion in the financial sector which highlights the need for diversity of thought and an inclusive culture in firms to support better decision making. They believe diversity makes business sense – from both a financial and consumer perspective and can lead to better outcomes for firms, support their safety and soundness, and promote financial stability.
They define diversity of thought as, “bringing together a range of different styles of thinking among members of a group. Factors that could lead to diverse thinking could include, but not limited to, different perspectives, abilities, knowledge, attitudes, information styles, and demographic characteristics, or any combination of these.” Some of these characteristics can be visible and measured such as gender, age and ethnicity, others including disability, sexual orientation, education and socio-economic background may not be.
An inclusive culture is one where everyone feels involved, valued, respected and treated fairly – where people feel comfortable to be their whole, authentic self. It allows individuals to express their views, speak up and raise concerns and should reduce the risk of groupthink.
The regulators want firms to be sufficiently diverse and inclusive to be able to understand and meet the needs of their diverse customer bases, otherwise their customers are at more risk of harm. They want to see firms achieving greater representation at all levels, and in particular at Board and senior management, and are considering ways to encourage firms to achieve this which may include regular data reporting, Board and senior manager accountability, guidance on ‘non-financial misconduct’ expressly linking to diversity and inclusion issues, and consideration of diversity and inclusion in the assessment of SMF applications and Threshold conditions.
Whilst the regulators recognise that proportionality will be key in any mandated requirements, these changes will affect all, and rightly so in my opinion. An inclusive firm or sector is about everyone and needs everyone to work together to achieve it. It’s in everyone’s interest.
AMI has recently undertaken a large piece of research into inclusion in the mortgage sector. A big thank you to everyone who took the time to complete the survey. The results are currently being collated, the report written, and we’re really looking forward to sharing this with the industry in October, launch date TBC.
It is our intention that the survey and report will be a launchpad. A chance for the mortgage sector to hold up a mirror and understand what it does well, to highlight the areas that need improvement and to share ideas on what needs to change. Some changes might be big, others might be small and yet make a big difference. Whatever your background or heritage, whatever makes you you, it’s a learning journey for us all. Some people are just starting out, others are a lot further down the road, but by working together we hope that we can help to make tangible change and ensure that everyone feels able to speak up, share their views and bring their authentic selves to work.
Lucy Lewis, AMI Senior Policy Advisor