Source · Select Committees · Treasury Committee
Recommendation 7
7
Deferred
Paragraph: 47
Encourage all financial services firms, especially smaller ones, to sign up to the Women in Finance Charter.
Recommendation
We welcome the focus of the PRA and FCA on diversity and inclusion in financial services, and agree they have a role to play. We have concerns, however, about their proposals to require firms to implement strategies, collect and report data and set targets. These requirements would be costly for firms to implement and have unclear benefits, while not capturing the many smaller firms that we have heard have some of the worst cultures and levels of diversity. We are also concerned that the requirements would be treated by many firms as another ‘tick-box’ compliance exercise, rather than necessarily driving the much-needed cultural change. Instead, we recommend that all financial services firms, particularly private businesses, hedge funds and other smaller firms, sign up to the voluntary Women in Finance Charter.
Government Response Summary
The PRA and FCA state they will carefully consider the Committee's recommendations regarding their proposals for extensive data reporting and target setting, alongside other consultation responses, before finalising their policy. They do not address the recommendation for firms to sign up to the voluntary Women in Finance Charter.
Paragraph Reference:
47
Government Response
Deferred
HM Government
Deferred
**PRA Response:** We thank the Committee for its recommendations in relation to data and target setting, which were one part of the wider package of proposals in the CP. We will consider these recommendations carefully alongside the other responses to the CP when finalising our policy. Our data collection, disclosure and reporting proposals had two main aims: to produce an aggregated industry-wide benchmarking report and to help build an evidence base for regulatory intervention. Our assessment was that the market was finding it difficult to improve diversity and inclusion. In relation to targets, the CP proposed that the largest firms would be required to set their own targets where they identify under-representation. Importantly, under our proposals, it would be up to firms to decide what targets were appropriate to their specific context, and the regulator would not set numerical targets or quotas. We will continue to consider the position carefully, including in light of the Committee’s recommendations. **FCA Response:** We are grateful to the Committee for their recommendations in relation to our policy proposals around data collection and target setting. We will consider carefully the Committee’s recommendation as we formulate our policy response in conjunction with the Prudential Regulation Authority. We remain committed to achieving healthy cultures, where everyone is included and able to progress, whilst being careful not to impose unnecessary costs on the industry. We agree that data collection should not be a tickbox exercise without an appropriate focus on outcomes. Taking into account the Committee’s recommendations, we are now prioritising our work on non-financial misconduct, including sexual harassment and bullying, and it will take some time to fully consider the very wide range of responses we have received to our proposals on diversity and inclusion. We will also consider what data may be needed to effectively deliver the other recommendations made to regulators by the Committee.