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Are your policies non-discriminatory? Think again

  • United Kingdom
  • Employment law
  • Financial services


Financial institutions are increasingly subject to complaints of indirect discrimination in their dealings with customers. There often appears to be a lack of understanding about the subtleties of indirect discrimination and, with the best of intentions, policies and procedures may be drafted in such a way as to place a block against customers who possess a protected characteristic. A recent landlord and tenant case illustrates this problem, highlighting how an inflexible policy not intended to discriminate against a protected group, in fact does just that.

Indirect discrimination

To recap, the Equality Act 2010 (EA) prohibits discrimination on the basis of these protected characteristics in certain situations. Discrimination may be direct or indirect. Indirect discrimination is defined at s19 where a ‘provision, criterion or practice’ (the PCP) is applied to a person with a ‘protected characteristic’ which is discriminatory as regards that person. The PCP is discriminatory if it is applied to both those with and to those without the relevant protected characteristic and puts – or would put – those with the protected characteristic at a disadvantage. There may be a defence where the PCP can be shown to be a proportionate means of achieving a legitimate aim, although this defence should be rigorously tested.

Protected characteristics include age;

  • disability
  • gender reassignment
  • marriage and civil partnership
  • pregnancy and maternity
  • race
  • religion or belief
  • sex
  • sexual orientation

Part 3 of the EA is concerned with prohibited conduct in respect of the provision of services. Section 29(1) EA provides that a person (a “service-provider”) concerned with the provision of a service to the public or a section of the public (for payment or not) must not discriminate against a person requiring the service by not providing the person with the service.

How a policy can indirectly discriminate

In the recent anonymised case, a county court held that a landlord’s policy of not accepting housing benefit tenants indirectly discriminated against women (the protected characteristic of sex). Whilst on the face of it, the policy would not have appeared to be discriminatory against women, the claimant was able to present statistics which showed that in respect of private tenants, 53% of single women claimed housing benefit as against 34% of single men. Women were more than 1.5 times as likely to rely on Housing Benefit, and thus be excluded by a ‘No DSS’ policy, than men.

The court also looked at disability and again in the private rented sector, 44% of households claiming disability allowances also claimed housing benefit compared to 15.1% of households who do not claim disability allowances making clear that a ‘no housing benefit’ policy also put disabled persons at a disadvantage.

What does this mean for financial institutions?

Indirect discrimination is notoriously difficult to pin down since it does not matter how innocent the motives and it is not always clear on the face of it how a PCP might operate to the disadvantage of someone with a protected characteristic.

Consider for example requiring a person with learning difficulties to complete complex forms to apply for a product. In the case of disability discrimination, the added layer of ‘reasonable adjustments’ means that for those individuals with the protected characteristic of disability (which is not always obvious or visible) reasonable adjustments should be made. This could include extending timescales or altering the means of communication.

Financial institutions have generally made physical access to and within their premises much easier for disabled persons but it is important to remember that legal obligations go much further than this and that sometimes, it is not easy to identify a disability. Given the reputational impact and expense of a discrimination claim (damages are unlimited for discrimination complaints) firms should take time to review their policies and procedures, to educate client-facing staff on indirect discrimination and how to spot it and to ensure that when a PCP is highlighted as being detrimental to those with a protected characteristic, to act swiftly and comprehensively.