A group of 10 major UK investors are calling on the Financial Conduct Authority to introduce mandatory ethnicity pay gap reporting for financial institutions.
The investors have today (December 18) written a letter to the regulator calling for action, in an effort co-ordinated by responsible investment charity ShareAction.
Kohinoor Choudhury, senior campaigns officer at ShareAction, said: “This is not just about fair pay, it is also about ensuring that our financial institutions adequately reflect the British society they are supposed to serve.
“The FCA should heed investors’ call for ethnicity pay gap reporting to be mandatory, as a crucial first step to raising workforce standards across the sector.”
The group includes Nest, Brunel Pension Fund and the Church of England Pensions Board and the 10 investors manage $118.78bn (£93.85) in assets in total.
The letter said: "We strongly commend the FCA’s efforts in diversity and inclusion and endorse the direction of travel being taken."
The letter noted that some firms in the investment industry voluntarily produce ethnicity pay gap reporting, including the FCA itself, PWC, M&G, State Street and Bridgewater.
It said: "We would argue that ethnicity pay gap reporting is merely a disclosure; it's not prescribing how companies act on DEI issues.
"Companies can come up with their own solutions, as we ask them to publish a narrative and action plan to complement the disclosure of their ethnicity pay gap."
The letter highlighted that Black, Asian or other ethnic minority staff currently hold only one in 10 management roles in the UK’s financial institutions.
This is a number that should be doubled if it is to reflect the FCA’s own targets and the UK’s ethnic make-up, according to the group.
Despite a commitment made in 2018 to mandate ethnicity pay gap reporting, earlier this year the government rowed back on this, saying it would prefer a voluntary code.
But the group claimed there is significant support across the business community "for clarity and statutory guidance".
The letter was written in response to part of the regulator's consultation on diversity and inclusion in the financial sector which closes to responses today (December 18).
After reviewing the feedback, the FCA is expected to publish a policy statement in 2024.
A spokesperson for the FCA said: “For UK financial services to be competitive and for the companies in it to be well run with healthy work environments, it's vital they attract, retain and promote the best talent.
"The data suggests this isn’t happening quickly enough and we recognise ethnicity can play a big role. That is why we are consulting on proposals to boost diversity and inclusion in UK financial services.”
tara.o'connor@ft.com
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