Financial services under scrutiny as clock ticks on new sexual harassment prevention laws

Financial services firms now have just six months to prepare for new sexual harassment prevention laws being introduced in The Worker Protection Act from 25 October. As a recent Treasury Committee report, ‘Sexism in the City’, cited that 45% of workers in financial services have experienced sexual harassment in the workplace, RSM UK says firms should take steps now to protect workers and ensure compliance. 

The new Worker Protection Act includes a mandatory legal duty for all employers to take reasonable and proactive steps to prevent sexual harassment of their employees. Breach of this could see employees claiming unlimited compensation at employment tribunals. 

Charlie Barnes, head of employment legal services at RSM UK, says: ‘Regulators have recognised sexual harassment in financial services needs tackling urgently, and the onus is on regulated firms to take action. Employers must be fully aware of their legal responsibilities and take steps now to protect their employees. Sexual harassment is extremely distressing for victims, and no business wants its employees to suffer in this way. For businesses, an accusation of sexual harassment can lead to costly compensation claims, reputational damage and recruitment issues. It’s in everyone’s best interests to eliminate it.’

The Treasury Committee’s recent inquiry, Sexism in the City, referenced the experiences of several senior female leaders in the industry, which were said to be “unacceptable” and “painted a negative picture of widespread sexual abuse and harassment towards women in financial services”, highlighting that there’s still plenty of work to be done. 

RSM UK recommends firms consider the following to prepare for the new law:

• Undertake a risk assessment of areas and practices of the organisation where employees may be exposed to risks of sexual harassment.
• Foster a culture where victims feel empowered to speak up, for example, providing a platform for them to report any incidents in confidence without fear of negative repercussions.
• Have a formal process in place to investigate any claims of sexual harassment made by employees and take appropriate action where necessary.
• Review sexual misconduct complaints policies and procedures to ensure they are legally compliant, accessible and effective. 
• Provide training to HR, line managers and all employees to ensure that signs of sexual harassment are recognised, and they understand how complaints should be handled.
• Seek support from professional advisers to ensure the new legal obligations and regulators’ expectations are fully understood and complied with.

In addition to the new law, the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have jointly conducted a consultation on improving diversity and inclusion in the sector, which includes non-financial issues such as sexual misconduct and bullying. The consultation clarifies expectations around non-financial misconduct, which will inform staff assessments, rules on conduct, and suitability criteria to operate in the financial sector. These new rules are likely to come into effect in 2025.