‘A lot more’ for industry to do to attract diverse talent

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‘A lot more’ for industry to do to attract diverse talent
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Progress is needed on social mobility at all levels in financial and professional services, according to a report.

The City of London socio-economic diversity taskforce, which the Law Society of England and Wales sits on, published a report into progression to senior levels in the financial and professional services.

It found these sectors still have work to do to ensure equity of progression for people from lower socio-economic backgrounds. 

The report found that 64 per cent of senior leaders surveyed were from a family with a professional background which is almost double the proportion (37 per cent) of the UK population.

Employees from a family with a professional background are 43 per cent more likely to be at senior level than their working-class colleagues.

Law Society president Stephanie Boyce said: “The report draws urgent attention to the need for professional services – including the legal sector – to improve their socio-economic diversity to ensure we reflect the society we serve.”

A lot more our industry must do to attract diverse talent into financial services and ensure progression within it. Maria Spooner, St James’s Place

It revealed that 26 per cent of senior employees attended fee-paying schools, which is three times the national average of 7.5 per cent, while 20 per cent of junior-level and 16 per cent of mid-level respondents attended fee-paying schools.

Speaking to FTAdviser, policy and public affairs director at the Chartered Insurance Institute, Matthew Connell, agreed that social mobility is a key issue for financial services.

The CII took part in the City of London socio-economic diversity taskforce that has produced definitions around social background connected to parental background.

“We believe that the financial advice profession is an important source of diversity within financial services, because it is made up of smaller firms and this allows people from different socio-economic backgrounds to set up their own businesses to cater for people from similar backgrounds.

"For example, it gives people from immigrant communities the freedom to specialise in services for members of that immigrant community in the UK in a way that they may not be able to do if they were employees of a larger corporation,” he said.

“It is important that regulation continues to allow this route to professionalism by making it possible to operate smaller firms, and not creating systems and governance requirements that make it impossible for small firms to function through compliance hurdles.”

Some 37 per cent of working-class respondents felt their background had held them back at work, compared to 18 per cent from a professional background.

Employees from working class backgrounds felt less able to be themselves at work, with respondents more likely to feel like an outsider, that their background negatively impacted their career and that they did not have the same chances of success in the workplace.

Just 1 per cent of respondents in senior positions were ethnic minority women from working-class backgrounds.

Head of responsible business consultancy at St James’s Place, Maria Spooner, said: “The report shows there’s clearly still a lot more our industry must do to attract diverse talent into financial services and ensure progression within it. 

“The findings sadly aren’t surprising but do bring a spotlight on this important issue and should be a catalyst for focusing efforts to ensure fair representation of people from all walks of life can be achieved across the sector. 

“Understanding the full picture and raising awareness is a positive step in driving change and supporting development for all.”

Spooner said at SJP, the firm engages with employees to understand the journeys individuals take which includes asking questions on socio-economic background. 

“There is still much to do to strengthen the external pipeline of talent and attract a greater range of people to work within our sector but one area we have seen early success is in our early careers approach, working with organisations and charities to help encourage diverse young talent into our business,” she said.

“When in the business, supporting employees to establish mentoring relationships and developing thriving communities of networks are important in helping them achieve their potential and getting them to where they want to be in their careers.”

New rules

Last year, the regulator proposed changes to its listing rules as a way of improving transparency on the diversity of listed company boards and their executive management teams. 

The regulator consulted on rules to require companies to disclose annually on a comply or explain basis whether they meet specific board diversity targets and to publish diversity data on their boards and executive management.

However at the time, law firm CMS said the FCA's diversity and inclusion listing rules will be “difficult to meet” for the majority of firms.

The FCA will not be setting quotas for companies to meet as the listing rule diversity targets are not mandatory. Instead it will provide a positive benchmark for issuers to report against. 

The benchmarks are for at least 40 per cent of the board to be women, at least one of the senior board positions (chair, chief executive officer, chief financial officer or senior independent director) to be a woman and at least one member of the board to be from an ethnic minority background.

It is also making changes to its disclosure and transparency rules to require companies to include key board committees and consider broader aspects of diversity. 

The rules began applying to listed companies for financial accounting periods starting from April 1, 2022. 

sonia.rach@ft.com

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