By Emma Scott, Content & Marketing Strategist.
As a female with a disability, I know firsthand how crucial it is for firms to be held accountable when it comes to creating truly inclusive workplaces. So, when the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) recently decided to abandon plans for mandatory diversity and inclusion (D&I) reporting, my heart sank just a little. The decision is not just a bureaucratic change, it’s a signal that progress in financial services is at risk of stalling, even regressing.
Diversity is often seen as just a buzzword, but in the financial sector it’s actually the key to innovation, better decision-making, and a stronger, more competitive industry. It’s well documented that companies that prioritise diversity thrive. Corporations identified as more diverse and inclusive are 35% more likely to outperform their competitors, and diverse companies are 70% more likely to capture new markets.
It therefore follows that organisations that treat it as an afterthought will struggle to connect with an increasingly global and varied customer base.
Mandatory D&I reporting is one of the few tools that ensures firms take diversity seriously rather than treating it as a nice-to-have. It forces them to assess and disclose diversity metrics, identify problem areas, and implement measurable strategies for improvement. Without these requirements, there’s a real danger companies will let diversity slide down their list of priorities.
Although the regulators argue that voluntary initiatives should be enough to encourage diversity, the truth is that for many, diversity will become performative. I’ve seen plenty of well-crafted corporate statements about commitment to DE&I that don’t translate into real, systemic change. Voluntary programs lack consistency, and without enforceable standards, firms can continue to present a polished image without making meaningful progress. We can’t afford for diversity to be treated as an optional extra – especially in a sector that has long struggled with representation.
Global context and regressive trends
This decision doesn’t exist in a vacuum. It’s part of a broader trend of rolling back DE&I initiatives across industries and geographies.
In the U.S., we’ve already seen major corporations quietly pulling back from their diversity commitments in response to political pressure. Goldman Sachs, for example, scrapped its requirement for diverse boards on IPOs – a policy that was initially seen as a game-changer. The UK’s move to drop mandatory reporting sends a similar message: that diversity is no longer a priority, and that progress is optional.
Impact on the financial sector
The financial industry has long struggled with a lack of diversity, especially in leadership roles. I’ve spent enough time in the SkyParlour team to know that diverse teams bring fresh perspectives, challenge outdated thinking, and help companies connect with broader audiences. Removing the push for mandatory reporting sends the wrong message: that companies no longer need to prioritise building inclusive workplaces. It’s a step backward, and one that could have lasting consequences for both employees and businesses.
The truth is, diversity isn’t just a feel-good initiative, it’s a business imperative. The companies that invest in diverse talent, foster inclusive cultures, and hold themselves accountable through transparent reporting are the ones that will succeed in the long run. The regulators’ decision risks leaving the UK’s financial sector behind in the global race for talent and innovation.
I can’t stress enough how important mandatory DE&I reporting can be. It’s not about red tape, it’s about ensuring diversity and inclusion remain priorities in a sector that desperately needs them. The FCA and PRA’s decision to drop these requirements risks undoing years of hard-fought progress. Without accountability, diversity becomes just another corporate slogan rather than a lived reality. For those who have struggled to be seen, heard, and valued, that is simply not good enough.