Toxic Culture in the City
Sexism, Harassment and Discrimination Remain Entrenched
Having represented numerous senior professionals in claims against major financial institutions, including NatWest, Barclays, Citigroup, Deutsche Bank, HSBC, Morgan Stanley, Société Générale, UBS and many more…I have seen first-hand that sexism, sexual harassment, harassment and discrimination remain deeply entrenched issues within many workplaces.
Despite years of inquiries, initiatives and regulation, the problem has not gone away. According to the Government, Financial Services is one of the largest sectors in the UK economy, employing 1.2 million people across the country, while according to TheCityUK (2024 report), related professional services employ 1.4 million. TheCityUk report also found that financial and related professions contributed £243.7bn (12% of the total) to UK real GVA* in 2023 (*gross value added).
Yet alongside this economic success sits a persistent and deeply troubling problem: entrenched sexism, discrimination and toxic workplace culture.
The Treasury Committee’s 2024 findings
In March 2024, the House of Commons Treasury Committee published its Sexism in the City report. Five years on from a similar 2018 inquiry, the Committee’s conclusion was stark: very little had changed. Evidence painted a bleak picture of workplace culture across large parts of the financial services sector, with many firms continuing to treat diversity and inclusion as a tick-box exercise rather than a core business priority. And while there had been some incremental improvement in the number of women in senior roles, progress was slow and, in some areas, non-existent.
More concerning still was the prevalence of sexual harassment and bullying. Evidence submitted to the Committee included accounts of serious misconduct, up to and including sexual assault and rape, alongside repeated failures by firms to investigate allegations properly or protect those who raised concerns.
The Committee was clear that these were not isolated incidents, but symptoms of deeper cultural failure. Perpetrators often faced few, if any, consequences, while victims were left with reputational damage, stalled careers, or forced exits. The widespread use of NDAs to silence complainants and shield individuals from accountability was highlighted as a key factor perpetuating impunity. Ultimately, the Committee concluded that the lack of meaningful progress since 2018 stemmed from a persistent failure to hold individuals, particularly senior individuals, to account.
Toxicity hasn’t gone away
While the legal and regulatory framework has continued to evolve since the Sexism in the City report, cultural change in large organisations is slow and can take years. In our experience at RSW Law, despite increased awareness, voluntary initiatives and regulatory scrutiny, sexual harassment, bullying and discriminatory behaviour remain widespread and are still being poorly handled by many organisations.
Reported conduct includes sexually explicit comments, inappropriate messages sent outside working hours, unwanted physical contact and, in the most serious cases, coercion into sexual acts. We continue to hear accounts of senior individuals harassing junior colleagues, and normalising behaviour that would clearly breach workplace policies, if those policies were meaningfully enforced.
Equally troubling is how some organisations respond after the event. In some cases, individuals dismissed for sexual harassment have later been praised internally for their commercial contribution, reinforcing the perception that misconduct will be overlooked where the individual is viewed as valuable to the business.
Regulation is tightening
The Financial Conduct Authority has now left no doubt that toxic workplace culture is not just an internal HR concern. In December 2025, it published its final policy statement PS25/23: Tackling Non-Financial Misconduct in Financial Services, confirming that serious bullying, harassment and violence will be treated as misconduct across all regulated firms.
The FCA has described non-financial misconduct as one of the clearest warning signs of a failing culture. Left unchallenged, such behaviour drives away talent, suppresses whistleblowing and undermines performance.
Their latest policy marks a significant tightening of expectations. Ambiguity around whether bullying or harassment could breach the Conduct Rules, particularly outside banking, has now been removed.
From 1 September 2026, these rules will apply consistently across banks and non-bank firms, extending to around 37,000 regulated entities. Crucially, serious non-financial misconduct must also be disclosed through regulatory references, making it harder for individuals to avoid consequences by moving between firms.
The Employment Rights Act
The Employment Rights Act is also helping to change the landscape with strengthened protections for those who raise concerns about sexual harassment. Under the new rules, allegations of sexual harassment will qualify as protected disclosures, meaning workers are protected from detriment and unfair dismissal when speaking up.
Whistleblowing policies should now be reviewed to ensure they clearly capture sexual harassment disclosures and provide credible, safe reporting routes. More importantly, organisations should be auditing whether their practices genuinely support early reporting or merely manage risk once problems have escalated. The law may protect the act of speaking up, but leadership behaviour will determine whether people actually feel able to do so.
The Act also signals another shift in respect of inequality. From April 2026, gender pay gap and menopause action plans will be voluntary, with mandatory requirements expected in 2027. While framed as optional in the short term, the direction of travel is clear: regulators are moving from encouragement to expectation.
Changing attitudes at the top
There is no single cause behind a toxic culture, although unsurprisingly, three drivers consistently seem to predict toxic outcomes, namely leadership behaviour, an organisation’s prevailing attitudes and work pressure.
But cultural change is hard to achieve at senior leadership level precisely because many of those in power have often succeeded within the very systems now under scrutiny. For leaders who rose through organisations that rewarded aggression, exclusion or misconduct (or quietly tolerated it), calls for cultural reform can feel like a challenge not just to behaviour, but to legitimacy and identity.
This resistance is often rationalised. Senior leaders may argue that “it wasn’t that bad”, that what was acceptable was “different at the time”, or that current expectations amount to rewriting history or wokeness. In reality, such responses reflect a deeper problem: why dismantle a system that validated your success?
Regulation is necessary, but it is not enough. While legal frameworks can constrain behaviour and create consequences for the worst abuses, they cannot on their own generate genuine belief. Too often, regulation produces compliance theatre (policies, training and statements) without meaningful shifts in power, attitudes or conduct.
Attitude change is further inhibited by the insulation of senior leaders. Feedback is often filtered, challenge can be seen as risky, and peer groups frequently reinforce existing norms. In such environments, harmful behaviour is minimised, excused or reframed as “commercial pressure”, while those affected bear the personal and professional cost.
Meaningful change requires more than awareness or training. It demands personal accountability, with culture metrics tied to performance, progression and reward. It requires confronting leaders with credible evidence of impact and making clear that status and seniority do not insulate individuals from consequence.
Crucially, culture change cannot be delegated. It must be led by senior leaders willing to accept discomfort, challenge entrenched power structures and attitudes and risk personal capital. Without that, efforts to address toxic culture will continue to stall, not because solutions are unknown, but because those with the power to act choose not to.
If you would like to discuss any of the issues raised in this article, please get in touch.
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