The Prudential Regulation Authority (PRA) has announced it will not proceed with publishing new rules on diversity and inclusion for the time being. This decision comes as part of a broader shift in regulatory priorities, reflecting changing political sentiments both domestically and internationally. The PRA's chief executive, Sam Woods, communicated this stance in a letter to Meg Hillier, chair of the Treasury Committee. While regulators have previously emphasized the importance of diverse representation to enhance risk management, the current approach seems to be taking a step back. Meanwhile, other government bodies like the Financial Conduct Authority (FCA) are also reconsidering their initiatives related to non-financial misconduct.

In recent years, UK regulators have highlighted the benefits of increased representation of women and ethnic minorities within financial institutions. They argued that greater diversity could mitigate groupthink and lead to more effective risk assessment. However, the Treasury Committee, composed of Members of Parliament, expressed concerns over the proposed measures, viewing them as overly bureaucratic and lacking substantive impact. The committee urged the abandonment of these plans, describing the data collection requirements as merely a "box-ticking" exercise rather than a meaningful reform.

Internationally, similar trends are emerging. In the United States, former President Donald Trump dismantled many diversity, equity, and inclusion (DEI) policies, labeling them as part of a "woke" agenda that he deemed oppressive. Within the UK, right-wing politicians such as Tory leader Kemi Badenoch and Nigel Farage from Reform UK have echoed similar criticisms, challenging DEI programs from a conservative perspective. These political shifts have influenced the regulatory environment, leading to a reevaluation of previous commitments to diversity initiatives.

The FCA, another key financial watchdog, has indicated it will delay its efforts to address non-financial misconduct issues, including workplace harassment and bullying. The authority plans to outline its next steps by the end of June. This pause suggests a cautious approach, allowing time for further consideration and alignment with evolving political and social landscapes. The decision reflects a balancing act between maintaining robust regulatory standards and responding to shifting public and political opinions on these matters.