6 July 2023

What’s the point of woke regulators?

By Fiona Bulmer

The Bank of England’s pronouncements on the ability of any gender to become pregnant are just the latest example of how our financial and economic regulators are no longer fit for purpose. When they were first established their remit was clear – to protect customers from being exploited by monopoly or unscrupulous providers. Now most of them seem to see their economic responsibilities as secondary to their campaigns to drive social change.

The Financial Conduct Authority (FCA) insists to those it regulates that ‘Climate change, like diversity and inclusion and other ESG issues must be a central part of how you do business’. Making profits or providing a good service to customers are seen as lesser concerns. In a speech last year its executive director of consumers and competition said, ‘firms and consumers face heightened pressures from the cost of living crisis but we must not lose sight of the importance of ensuring diverse representation and inclusive cultures’. Listed among the key activities in its business plan for 2023-24 are to, ‘continue our work with industry and regulators to drive improvements in Diversity and Inclusion (D&I) transparency’.

To be fair to the FCA they do not just talk the talk on diversity, it is at the centre of their own organisation. Their 60 page diversity report outlines how it supports every minority group in its organisation. It has an ‘InsideOut network’ which ‘aims to raise awareness of LGBT+ lived experience’ and which has spent the past year focused on intersectionality. There is also a network to support ‘LBT+ women, non-binary and bi+ employees, LGBT+ parents and those parenting LGBT+ children’. Their main achievement over the past year has been to ‘deploy system changes allowing colleagues to add their pronouns and the pronunciation of their names to our internal colleague directory’. The amount of time spent on all this must make those it regulates, at great expense, wonder how the FCA ever finds time to fit in its day job.

The Competition and Markets Authority (CMA), set up to promote competition and protect consumers, is equally distracted by woke causes. It was recently reported as requiring staff to spend half a day a week on equality and diversity activities. It also takes a firm line on those it regulates, explaining that before they will send a speaker to an external event, organisers must fill in a form to demonstrate that any panel has racial and gender diversity and, bizarrely, ‘inclusive catering’.

They too have ‘networks dedicated to the support of a variety of colleagues including our Rainbow, Race, Multifaith, Women’s, EU Nationals, Christian, Dyslexia”  and proclaim the benefits of their work with the Stonewall Leadership Programme.

Ofgem, which you might have thought would be focused on managing the particular challenges in the energy market, say that they are committed to ‘improving diversity and inclusion internally and across the energy sector – it is one of our top priorities and absolutely vital when addressing current challenges in the sector’. They proudly proclaim that they ‘raise diversity and inclusion as a key issue when meeting with energy industry stakeholders’.  All this is being reinforced by their work to recruit, ‘a full EDI team to embed and drive change’ and to make sure that,  ‘all staff will have an EDI objective and be held accountable for this’.

This does seem to be serving as distraction from the job they were set up to do. As the National Audit Office found, ‘Ofgem could not have prevented the increase in wholesale prices in 2021 from significantly affecting consumers, but it did not do enough in the years that preceded it to ensure the energy supplier sector was resilient to external shocks’.

All this matters because without anybody really noticing, regulators have extended their reach and are imposing requirements on regulated firms on a whole range of contested and complex social issues. This is an expensive distraction, but worse it means unelected officials are driving their own political agenda which is likely to make the sectors they regulate less profitable and less able to give customers a good deal.

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Fiona Bulmer is chairman of governors at a London primary school and a former Conservative councillor.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.