Bank of England Drops Diversity Rules Amid U.S. Rollbacks

The Bank of England has announced its decision not to implement new diversity and inclusion rules for the financial sector. This choice aims to prevent overwhelming firms with excessive regulatory requirements, especially as discussions around economic growth continue.

The news was revealed by the Bank's enforcement division, the Prudential Regulatory Authority (PRA), on Tuesday. This comes in response to significant U.S. companies, influenced by recent trends and political changes, withdrawing their diversity initiatives following critiques by former President Donald Trump.

In a letter from the PRA's chief executive, Sam Woods, to Meg Hillier, chair of the parliament Treasury Committee, it was stated that the organization will keep monitoring the risks of uniform thinking within the financial firms it oversees. However, they will not require these companies to report on their progress toward improving representation of women and ethnic minorities.

This decision follows a parliamentary investigation known as 'Sexism in the City' that took place in 2024, focusing on issues of misogyny within the financial services sector. A previous inquiry in 2018 looked into allegations of sexual harassment in the industry.

Mr. Woods noted in his letter that while diversity and inclusion could enhance decision-making and risk management, benefiting the UK financial sector's competitiveness in the long term, firms expressed concerns about incurring additional costs and duplicating efforts. The report also indicated that only marginal advancements have been made toward closing the gender pay gap and addressing issues related to sexual harassment and bullying.

In Mr. Woods' communication, it was pointed out that there is already a legislative agenda focusing on gender action plans and pay gap reporting related to disability and ethnicity. This existing framework aims to streamline approaches without placing further regulatory burdens on businesses.

The call for reducing regulatory demands aligns with Chancellor Rachel Reeves’ push to facilitate economic growth by cutting unnecessary red tape. Meanwhile, the UK’s employment rights minister, Justin Madders, expressed that he does not anticipate British companies to follow the U.S. trend of retracting diversity goals, despite heightened concerns stemming from Trump’s policies.

While major U.S. companies like Google, Meta, and Amazon have dialed back their diversity initiatives, UK firms such as Deloitte reaffirmed their commitment to diversity. The CEO of Barclays emphasized their ongoing dedication to inclusion, regardless of shifts occurring in the United States.

For now, the PRA has decided not to introduce any new regulations regarding diversity and plans to revisit this topic only after the implementation of related legislative measures.

Banking, Diversity, Regulation