UK Financial Watchdogs Scrap Diversity, Inclusion Plans

British financial regulators have retreated from the plan, citing ’regulatory burdens,' as corporate America adapts to a shifting business climate.

Commuters cross the Millennium Bridge in London on March 5, 2025. Ben Stansall/AFP via Getty Images

Britain’s top financial regulators said on Thursday that they have scrapped plans to enhance diversity and inclusion in the industry.

The Financial Conduct Authority (FCA) and the Bank of England’s regulatory arm, the Prudential Regulation Authority (PRA), said in a March 13 statement that the plans would have imposed extra regulatory burdens.

The FCA, which regulates around 42,000 financial services firms in the UK, had proposed that large firms collect and report data annually to regulators on a range of demographic characteristics and inclusion metrics, as well as set targets to address underrepresentation.

In a joint statement, the regulators said, “In light of the broad range of feedback received, expected legislative developments and to avoid additional burdens on firms at this time, the FCA and PRA have no plans to take the work further.”

Sam Woods, CEO of the PRA, said the new requirements “could be seen as in tension” with efforts to enhance competitiveness by reducing red tape on firms.

In mid-January, Chancellor of the Exchequer Rachel Reeves urged regulators to develop policies that do not overly burden companies.

In a 2021 discussion paper, the regulators and the Bank of England said, “We see diversity and inclusion as an important driver of healthy cultures, so this should be embedded throughout firms.”

The FCA’s 2022 rules required UK-listed companies to report information and disclose progress against targets for the representation of women and ethnic minorities on their boards and executive management teams.

This meant that at least 40 percent of the board and one of the senior board positions had to be women. At least one member of the board had to be from an ethnic minority background excluding “white ethnic groups,” according to the FCA.

Last year, the trade body UK Finance said that firms had to grapple with potential challenges resulting from a “hardening of anti-DEI views by those who fear DEI detracts from profitability or positively discriminates against others.”

Reboot, an advocacy group that wants more diversity, equity, and inclusion (DEI) policies in the financial services sector, said the regulators’ decision was disappointing.

The group said it had surveyed 800 mid-to-senior level “ethnic minority and white employees” of whom 70 percent said that “little to no real progress” has been made since the 2020 Black Lives Matter movement.

“We’ve seen growing pushback against DEI this year, fuelled by geopolitical uncertainty and mounting pressure across the ESG landscape,” the group wrote in a post on LinkedIn. “While we understand the challenges regulators are facing, this decision risks reinforcing the wrong message at a time when meaningful progress is needed most.”

‘Colorblind, Merit-Based’

The position updates from the PRA and FCA were made as corporate America navigates a shifting business climate.

In his second term in office, President Donald Trump has signed executive orders that seek to roll back DEI programs, extending the prohibition to all federal agencies, departments, and commissions.

In his inaugural address, Trump pledged to “end the government policy of trying to socially engineer race and gender into every aspect of public and private life.”

“We will forge a society that is colorblind and merit-based,” he said.

Noline Matemera, partner at law firm Osborne Clarke LLP, said, “Developments across the pond and the repeated push back on publishing final rules by the FCA and PRA mean today’s statement does not come as a surprise at all. Whether [it] is the death knell for focusing on D&I in financial services in the UK is yet to be seen.”

Major U.S. companies, including Meta, Goldman Sachs, and Target, have announced actions to roll back or end their DEI initiatives.

Last year, Boeing dismantled its diversity program, and Sara Liang Bowen, a company vice president who led the DEI department, resigned from her post in October 2024.

A spokesperson for Facebook owner Meta told The Epoch Times earlier this year that it was ending the use of DEI in hiring, development, and procurement services.

Tom Ozimek, Naveen Athrappully, Kevin Stocklin, and Reuters contributed to this report.