On 8 March 2024, the House of Commons Treasury Committee (the Committee) published a report as part of its current inquiry into Sexism in the City, in order to evaluate the progress made in relation to gender based inequality within the financial services sector, since its predecessor Committee highlighted the problem in 2018. The issues raised by the 2018 Committee included the underrepresentation of women in senior positions, as well as a large difference in average pay between men and women.

The report however, outlines that there has been a significant lack of progress since 2018.

Key findings

Key findings of the report can be summarised as follows:

  • Many of the barriers to women identified in 2018 remain stubbornly in place and firms still treat diversity and inclusion as a ‘tick box’ exercise rather than a core business priority, despite clear evidence that diverse firms achieve better results.
  • There have been only incremental improvements in the proportion of women holding senior roles in financial services firms.
  • Sexual harassment and bullying remain prevalent in financial services and firms are dealing with allegations of such behaviours poorly.
  • There is a widespread misuse of non-disclosure agreements in the sector, which have the effect of silencing the victim of harassment and forcing them out of an organisation, while protecting perpetrators.
  • The average gender pay gap in financial services remains the largest gender pay gap of any sector in the UK economy.

Responsibility for tackling these issues and driving much-needed cultural change must sit with the senior leadership and boards of firms. Investors also have a key role to play in holding firms to account, as do the Government and financial regulators in driving change, combatting sexual harassment, and bullying.

The report further states that neither of the Government’s flagship policies on gender equality (the gender pay gap reporting regulations introduced in 2017 and HM Treasury’s Women in Finance Charter introduced in 2016), have brought about the extent of change that was hoped for.

The report welcomes the proposals by the Financial Conduct Authority (FCA) and the Prudential Regulatory Authority to strengthen their non-financial misconduct rules and enhance their ability to act against individuals in sexual harassment cases. However, it expresses concern around the regulators’ proposals to require firms to implement strategies, collect and report data and set targets, as it states well-run firms should be doing this anyway. These costly initiatives with unclear benefits would likely be treated by many firms as another ‘tick-box’ compliance exercise, rather than necessarily driving much-needed cultural change. The requirements would also not apply to smaller firms with fewer than 251 employees. This is concerning as the Committee’s anecdotal evidence suggests issues are more prevalent within such firms.

FCA statement

The FCA has released a statement regarding the report.

The statement highlights that the FCA shares the Committee’s view that there is an important role for regulators to play in tackling gender inequality, given the link to the FCA’s statutory objectives and the relevance for financial services’ competitiveness. It also states that the FCA agrees with the Committee on the importance of calling on boards and senior leadership of firms to take greater responsibility for delivering change.

The statement references the FCA’s consultation on proposals to boost diversity and inclusion within the financial services sector and welcomes the Committee’s feedback on it. The FCA will reflect on the range of views received, particularly those of the Committee, on its proposals that firms should set their own diversity and inclusion strategy and collect, report, and disclose data against certain characteristics. The FCA will also consider how it can tighten expectations on firms to tackle misconduct such as bullying and sexual harassment, through considering the Committee’s recommendations.