The UK’s Business Secretary, Kemi Badenoch, expressed concerns about the abundance of rules in the financial services industry and emphasized that cultural issues should not impede growth. Speaking at TheCityUK international conference, she said her role often involves vetoing what she considers to be bad ideas. Badenoch mentioned that she has cautioned UK financial regulators against the potential negative impacts of proposed mandatory ethnicity quotas, which she believes are not required by law and could be counterproductive.
According to a letter from major UK investors to the Financial Conduct Authority (FCA), only one in ten management roles in UK financial institutions is held by Black, Asian, or other ethnic minority staff. The investors urged the FCA to introduce mandatory ethnicity pay gap reporting to promote more equitable workplaces. The FCA is currently considering proposals to enhance diversity and inclusion in UK financial services. Badenoch has adamantly opposed mandatory ethnicity pay reporting on numerous occasions, citing concerns about its effectiveness in driving meaningful change.
Reflecting on her own background in banking and consulting, Badenoch drew upon her personal experience to argue that regulation in the financial sector has become overly burdensome over the years. She highlighted her preference for regulations that protect against fraud and systemic failure rather than regulations that emphasis diversity and green finance. Concerned about the growing trend towards excessive micromanagement, she warned that this could hinder growth, productivity, and innovation rather than strengthen financial markets as intended.