‘Equality quotas’ just hold firms back, says Badenoch
PLANS to impose ‘equality quotas’ on banks and other financial firms should be scrapped, the Business Secretary said yesterday.
Kemi Badenoch has written to the Financial Conduct Authority and Prudential Regulation Authority warning the idea would be a ‘distraction’ holding firms back.
She disclosed the move in a speech to a City conference yesterday, saying: ‘My role... often involves the killing of bad ideas.’
Ms Badenoch said piling more rules on to business resulted in ‘stifling of the free market and the weakening of the wealth generation that we desperately need’.
And she warned that a ‘tide of ever more intervention’ in financial services would ‘accelerate and become even stronger’ should Labour win power.
Under FCA and PRA proposals, set out last year, larger financial firms would be forced to set targets to address ‘under-representation’ of women and ethnic minorities.
It would mean setting separate targets for the board, the senior leadership and the workforce as a whole – which would be publicly disclosed and reported on annually.
But Ms Badenoch – who is also minister for women and equalities – told a conference hosted by TheCityUK that she had written to the FCA and PRA ‘warning them against their proposed mandate of equality quotas – something the law does not require and could be counter-productive.’
She added: ‘ Regulation has moved from protection against fraud and systemic failure to everything from diversity to green finance. The ever-rising tide of micromanagement will not necessarily make us, or the financial markets, stronger.’
Ms Badenoch cannot order the regulators, which are independent, to scrap their plans, but by making her opposition to them clear is aiming to kill them off.
In her letter last month she said she agreed that diversity can make firms more effective.
But she added: ‘It is disputed that these can be achieved through de facto quotas and associated reporting requirements or particular characteristics as you are proposing.’
The FCA and the PRA, which is part of the Bank of England, have received the letter and are yet to respond.