The Worker Protection Act is expected to become law from 25 October.

Tax and audit consulting firm RSMR UK says a recent Treasury Committee report, ‘Sexism in the City’, reported that 45% of workers in financial services have experienced sexual harassment in the workplace.

With this in mind, RSM says firms should take steps now to protect workers and ensure compliance.

The new Worker Protection Act includes a mandatory legal duty for all employers to take "reasonable and proactive steps" to prevent sexual harassment of their employees.

Breach of this requirement could see employees claiming unlimited compensation at employment tribunals.

Charlie Barnes, head of employment legal services at RSM UK, said: “Regulators have recognised sexual harassment in financial services needs tackling urgently, and the onus is on regulated firms to take action.

"Employers must be fully aware of their legal responsibilities and take steps now to protect their employees. Sexual harassment is extremely distressing for victims, and no business wants its employees to suffer in this way.

“For businesses, an accusation of sexual harassment can lead to costly compensation claims, reputational damage and recruitment issues. It’s in everyone’s best interests to eliminate it.”

The Treasury Committee’s report referenced the experiences of several senior female leaders in the industry, which were said to be “unacceptable” and “painted a negative picture of widespread sexual abuse and harassment towards women in financial services,” the firm said.

The firm recommends financial services companies take steps including carrying out a risk assessment of the organisation in areas where employees may be exposed to risks of sexual harassment. Firms should also “foster” a culture where victims feel empowered to speak up.

Firms should also have a formal process to investigate any claims of sexual harassment by employees.

The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have jointly conducted a consultation on improving diversity and inclusion in the sector, which includes non-financial issues such as sexual misconduct and bullying. New rules are expected in 2025, RSM UK says.

RSM is an audit, tax and consulting firm with 4,715 partners and staff operating from 30 UK locations.