If the Financial Conduct Authority is to extend or confirm (depending on what you read) its remit to include non-financial misconduct and specifically bullying and harassment in its fitness and propriety assessment, then the potentially career-ending consequences for those concerned require that we are all very clear as to what those terms mean.
Harassment obviously has some statutory definitions in Section 26 Equality Act, so that part of NFM is likely to be easier to act upon, relatively speaking. At only slight risk of over-simplification, section 26 says that A harasses B where A engages in unwanted conduct related to a protected characteristic (section 26(1)) or conduct of a sexual nature (section 26(2)) and in either case, that conduct has the purpose or effect of creating an intimidating, hostile, degrading, humiliating or offensive environment for B. Section 26(3)(c) adds a further category of harassment, i.e. where B’s rejection of or submission to conduct of a sexual nature leads A to treat B less favourably than would otherwise been the case.
All those strands of harassment are then subject to the gateway in section 26(4)(c) that it must be reasonable for that conduct to have had that effect on B. However, that is not an entirely objective reasonableness, since the Employment Tribunal is also required to take B’s “perceptions” (i.e. not necessarily objective reality) into account. As a result, the hurdle of reasonableness is fairly easily jumped by most Bs.
So far, so good. But a fundamental question remains to be answered by the FCA – is all unlawful harassment the same in its eyes and if not (as must surely be the case), where is the financial services employer to draw the line between that which touches on fitness and propriety and that which does not? We could probably take a punt on harassment under section 26(3)(c) being caught, since that falls squarely within the old City tropes of being required to sleep with your manager in order to progress. We could also be fairly sure that sexual conduct with the express purpose of upsetting B would be deemed to cast a long shadow over your suitability to hold a regulated position. Conduct which is consciously motivated by sexual or discriminatory intention does not as a matter of bald logic necessarily affect your technical ability to do your FS job, at least the non-managerial parts of it, but it will be seen as both morally and politically necessary for employers and the FCA to treat it as if it does.
The yawning gap in the draft proposals thus far is as to conduct which is related to gender (where “related to” is not in any sense the same as “caused by”) and has the effect of upsetting B but which has no ill-intent behind it at all. One of the factors going to the reasonableness of claimed offence under section 26(4) (c) is what is known of A’s intentions – therefore if B knows that A means no harm, B’s ability to get really bent out of shape by what A says or does is far more limited. However, the reference in section 26 to conduct having a certain purpose or effect makes it clear that intention is not a pre-requisite to a finding of unlawful harassment. So would an employer really be required to report to the FCA the making of a rugby-club joke, an inadvertent touch, a compliment on appearance, an unthinking sign-off x on a friendly email, a clumsy remark about Venus and Mars, etc?
On any rational view, the answer to this has to be no. Not only would the FCA lack the time, resource and indeed interest to poke about in tiny internal matters of this sort, but more importantly, none of them go anywhere near A’s fitness and propriety. A may be a bit bull-in-china-shop as a manager, a bit shaped by upbringing or schooling or time in the military, perhaps a bit of a dinosaur in some attitudes, and so on, but the FCA is not looking for perfect managers or human beings here. It just wants people who can be trusted not to harm stakeholder confidence in the UK’s financial services sector through behaviours which will deter others from giving their best and hence from growing equality and diversity of views within the sector’s workforce. If the FCA’s focus on NFM is not to be undermined by a tidal wave of irrelevancies, employers must have a right to take a reasonably robust view on this topic and to regard some instances of harassment as adequately dealt with internally.
The draft Handbook text provides some comfort in this respect. Para 4.1.11(G)(1) states that “misconduct in relation to a fellow employee” (workplace stuff, in other words) may not have regulatory significance if the perpetrator either (a) reasonably believed that he/she was acting appropriately or (b) did not intend any negative impact on the subject of the misconduct, did not know they were having that impact and was not reckless about the effect of that conduct. This is useful for employers because it pays much greater regard to the thought-processes of A as the person whose fitness and propriety is on the block than to the impact on B which is the focus in the Equality Act. It reinforces that there is a meaningful distinction between purpose and effect when considering NFM, even though not in the Act. Nonetheless, we still have that “may”, so the question Is not beyond doubt. It may also encourage more complaints by staff (though probably more about bullying than harassment) because once you have complained, your manager can no longer say that he/she “did not know they were having that impact”, so next time out, this defence or exception may not be available to the employer.
That leaves at least two other NFM questions for posts to follow shortly – first, what impact does all this have on your whistleblowing structures, and second, a piece which I have provisionally titled “If you think applying NFM to harassment is complicated, just try bullying”.