Sexual Harassment: Is It Fit And Proper?

Whilst Sir Philip Green has described the use of parliamentary privilege to reveal allegations of sexual harassment against him as his "worst week", he may reflect that he is fortunate not to be regulated by the Financial Conduct Authority ('FCA').

Earlier in the same month that the allegations against Sir Philip were made public, the FCA announced that blowing the whistle on sexual harassment would trump any confidentiality provisions a bank might seek to impose on current and ex-employees.

After the last financial crash, concerns about "culture" and "conduct" became central to the regulators' attempts to clean up the City and its image. This latest announcement by the FCA is clearly a response to the #MeToo movement and an attempt to ensure that serial harassers do not move unchecked from one work place to another.

Previously, allegations of sexual harassment were usually categorised as personal behaviour(s) which were not relevant to the FCA's assessment of fitness and propriety. That has now changed. Sexual misconduct has become an explicit concern of the FCA. This means that if such allegations are proven, this may result in that individual being barred from continuing their career in the regulated financial services sector.

The FCA is responding to media commentary and senior politicians' concerns that regulators across all sectors must do more to tackle workplace bullying and sexual harassment in the UK. However, the FCA is not experienced in assessing allegations of this sort. Many of the investigations carried out by the FCA are document heavy. The FCA is able to trawl through years of data to establish whether financial misconduct has taken place. However, there is rarely any tangible evidence of bullying and sexual harassment.

Cases of bullying and sexual harassment are usually delicate and fact sensitive. The legal definition of sexual harassment is that it occurs where:

A engages in unwanted conduct of a sexual nature; and The conduct has the purpose or effect of either violating B's dignity, or creating an intimidating, hostile, degrading, humiliating or offensive environment for B. It also occurs where because B has either rejected or succumbed to A's (unwanted) advances, A goes on to treat B less favourably than would have otherwise been the case.

An investigation into an allegation of sexual harassment involves an assessment of the victim's perception of what happened as well as whether it was reasonable for...

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