Your IndustryJun 6 2018

MPs to tackle gender representation in financial services

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
MPs to tackle gender representation in financial services

MPs are to further scrutinise appointments at financial services firms to ensure the industry becomes more equally represented, the chairman of the Treasury select committee (TSC) has said.

Speaking at an event organised by the Personal Investment Management & Financial Advice Association (Pimfa) in London today (6 June) Nicky Morgan said the committee would in future incorporate the question of gender diversity in the grilling of any firm appearing before it.

It is already scrutinising appointments made by HM Treasury to organisations such as the Bank of England and the Financial Conduct Authority.

The Bank of England appointed its latest addition to the interest rate-setting monetary policy committee at the end of May, Professor Jonathan Haskel, head of the economics department at Imperial College's business school.

The Bank said eight women and 19 men applied for the role, with four women and one man making the shortlist, before Professor Haskel was appointed.

There is currently just one female member of the monetary policy committee, Silvana Tenreyro, a professor at the London School of Economics.

Ms Morgan said she wanted the gender pay gap reporting requirements to be widened out to all firms, not just the ones with 250 or more staff.

This would include small IFA firms.

Currently firms employing more than 250 people are required to publish figures comparing men and women’s average pay across their organisation on an annual basis.

Firms had until April to report their figures and those who have failed to do so could face action from the equality and human rights commission as early as this month, Ms Morgan said.

Gender representation in financial services has been notoriously poor.

Ms Morgan said there was a roughly equal split between men and women entering the financial services sector but that was not mirrored higher up, where the average share of female representation was about 23 per cent, while on executive committees the average was 14 per cent.

A mere 6 per cent of chief executives at financial firms were women and between 7 and 13 per cent of chief investment officers, chief financial officers and chief operation officers, she said..

To aid progress the government launched its ‘Women in Finance Charter’ in 2016, which asks firms to sign up and commit to four points around promoting gender diversity.

About 205 firms have signed up so far.

The Treasury select committee has been conducting an inquiry into the finance charter since October last year and is about to publish its final report.

Ms Morgan said: "Our inquiry is coming to its conclusion but our significant interest in diversity will not. We will be looking at the appointments. 

"We have already asked for the number of men and women who have been shortlisted to be seen by the interview panel [at Treasury-appointed firms] and will continue to ask about gender diversity in appointments.

"And if any of you folk have the opportunity to appear before the Treasury select committee you can expect that we may well ask that question about the gender pay gap in your own organisation."

In its inquiry the Treasury select committee detected three themes that determine diversification at firms.

It found culture and unconscious biases were underlying barriers to gender diversity, while  transparency around reporting pay and representation figures was key to driving change.

Unconscious biases include stereotypes and assumptions made about another person, for instance when hiring them.

Ms Morgan said: "The levels of gender diversity currently are insufficient in the financial services sector, particularly among senior ranks. There is clearly a long way to go.

"It is important for all of us to review and challenge our recruitment, performance review and promotional processes. 

"It is very easy for us to continue and recruit in our own image and those in senior roles need to give more permission and power to those in middle management, who are in charge of recruiting, to actually recruit somebody who looks different."

The bonus culture was also identified as “problematic” as it could veer towards men being rewarded better than women, in turn feeding into the gender pay gap.

“It undoubtedly puts some women off the financial services sector with women potentially feeling less comfortable arguing for financial recognition,” Ms Morgan said.

She added: “Diversity is intrinsically right. Gender diversity and that of minority groups has to be pursued because exclusion of any group in our society is clearly unacceptable.”

carmen.reichman@ft.com