UK boardrooms have been coming under intense pressure to tackle extensive inequalities and a lack of inclusion within financial services, after the Financial Conduct Authority (FCA) published a paper in July urging them to review pay levels and “act swiftly” to address any disparities.
The consultation paper, drafted jointly with the Prudential Regulation Authority (PRA) and the Bank of England (BoE), seeks to investigate how diversity can be improved, calling for feedback by the end of September.
Highlighting particular areas of concern, the paper stated that “large gender and ethnicity pay gaps still exist in the financial sector.”
“There are parts of the industry which lack diversity at senior levels, and the products offered to customers still do not always meet the needs of disadvantaged groups.”
Suggestions for improvement include ensuring at least 40 per cent of board directors are women, with at least one senior board position assigned to a female member.
It’s also recommended that boards have at least one member from a non-white ethnic minority background.
Companies will need to either comply or explain why they have missed these targets, which are seen as a way of measuring their success in increasing diversity.
The drive, which follows numerous studies highlighting failings in corporate Britain, have been welcomed by leading financial services firms.
Maureen Penfold, managing partner at Moore Kingston Smith, insists diversity and inclusion have always been important for long-term business success.
“Not only is it vital to attract and retain talent, which is a key topic at the moment, but inclusivity provides multi-faceted benefits to organisations,” she said.
Penfold believes these positives are even more important in in today’s challenging landscape.
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“Diverse organisations perform better, have higher employee satisfaction, and greater financial returns.”
Penfold also argued firms must remember that close links between their purpose, strategy and values on one side and remuneration on the other have a direct influence on behaviours, conduct and culture.
“Social impact on their people and environment is critical, hence fair and balanced remuneration is essential,” she said. “Open, regular reporting and transparency will assist in keeping it front of mind and should move the dial towards greater diversity and inclusion.”
Jenny Baskerville, head of inclusion, diversity and social equality at KPMG UK, believes the issues are for everyone to tackle – from policymakers to regulators, firms and individuals.
“All businesses must play their part if we are to achieve a more equal and prosperous future for all in society,” she said. “They must be reflective of the diversity of their customer base and society.”
Baskerville believes regulators have an important role to play in encouraging progress, building on government-backed programmes such as the Hampton Alexander and the Parker Reviews.
“These programmes clearly demonstrate what can be achieved with a collective and sustained effort to address an issue,” she said.
“However, while progress has been made in many areas in recent years, there is still a lot of work to be done.”
Baskerville maintains it’s important for professional services firms to not only keep in mind targets for inclusion and diversity, but also ethnicity, sexual orientation and disability.
“This level of transparency helps us track progress and hold ourselves to account, while also identifying where we need to take action,” she said.
However, she believes it needs to go further, which is why colleague sentiment within KPMG is monitored through surveys and employee networks.
“Workforce diversity statistics and pay gap data are no substitute for the lived experience of an individual,” Baskerville said.
The overall goal of this approach is “to build a holistic view of where barriers exist” in order to tackle them more effectively.
“This also conveys the message that there’s no limit to where talent, achievement and hard work can take you, whoever you are, and whatever your background.”
“The ultimate benefit of placing such focus on inclusion, diversity and social equality is creating an inclusive culture and an equitable society,” she added.
Kay Forsythe, financial services partner at Deloitte, believes the key to success is getting everyone working towards the same goal.
“Achieving greater opportunity for equality requires collaboration between people and companies to make progress,” she said.
She said the company was part of the City of London Corporation-led taskforce exploring how to boost socio-economic diversity in leadership within financial and professional services.
“We see organisations across all sectors working hard to support further progress, recognising that ‘purpose-led’ companies have an advantage because they generate trust, goodwill and momentum amongst their stakeholders,” she added.
According to director of inclusion and wellbeing Miriam Earley, Deloitte is also keen to practise what it preaches.
Action being taken includes delivering its Black Action Plan commitments, support for women’s progression, and championing 12 diversity networks across the firm.
“Focusing on our people means making sure everyone in Deloitte feels able to be their true self – and knows they belong,” Earley said. “The past year and a half has reminded us more than ever of the importance of putting people and purpose at the heart of our business.”