The FCA’s approach sets positive diversity targets for listed companies. If they cannot meet them, they need to explain why not.

This approach allows flexibility for smaller firms or those based overseas. The rules also allow companies to decide how best to collect data from employees to show they are meeting the targets.

The rules will apply to listed companies for financial accounting periods starting from 1 April 2022. The FCA will review the rules in three years’ time to make sure they are working and to check if the diversity targets are still appropriate.

This work reflects the FCA’s focus on speeding up the pace of change around diversity and inclusion in financial services.

Sarah Pritchard, executive director of markets at FCA, commented: “As investors pay increasing attention to diversity at the top of the companies they invest in, enhancing transparency at Board and executive management level will help hold companies to account and drive further progress.”