Source · Select Committees · Treasury Committee
Sixth Report - Sexism in the City
Treasury Committee
HC 240
Published 8 March 2024
Recommendations
6
Deferred
Para 46
Urge financial firms to prioritise diversity and inclusion as a core business matter.
Recommendation
First and foremost, it must be the responsibility of firms, boards and investors to drive improvements in diversity and inclusion, particularly given the clear evidence that 40 Sexism in the City more diverse firms achieve better results. We heard that …
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Government Response Summary
The government deferred a decision, stating it is currently working through 257 responses to its policy proposals on data collection and target setting, and will carefully consider the Committee’s recommendation as it formulates its policy response.
HM Treasury
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7
Deferred
Para 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 …
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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.
HM Treasury
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8
Deferred
Cease regulator plans for extensive data reporting and diversity target setting requirements.
Recommendation
We recommend that the regulators drop their plans for extensive data reporting and target setting. In our view, a lack of diversity is a problem that the market itself should be able to solve without such extensive regulatory intervention. Boards …
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Government Response Summary
The PRA and FCA state they will carefully consider the Committee's recommendation to drop their plans for extensive data reporting and target setting, taking into account other consultation responses, before finalising their policy.
HM Treasury
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10
Rejected
Para 76
Encourage financial firms to equalise parental leave and publish policies, boosting uptake by men.
Recommendation
We recommend that the Government and regulators encourage all firms to consider equalising their offer of parental leave for men and women, and to actively encourage more men to take it up. We also recommend that the Government and regulators …
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Government Response Summary
The government acknowledges the importance of fathers' roles and points to existing shared parental leave provisions. However, it explicitly rejects encouraging firms to be transparent by publishing parental leave policies, citing concerns about a 'one-size-fits-all' approach and burden on employers.
HM Treasury
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11
Accepted
Para 77
Risk of losing hybrid working benefits for women with caring responsibilities.
Recommendation
Hybrid working spread accidentally and unplanned as a result of the Covid pandemic and the full benefits and costs of new hybrid and remote working arrangements continue to be identified. Those arrangements have, however, provided substantial Sexism in the City …
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Government Response Summary
The government agrees that flexible working can improve diversity, noting the recently enacted Flexible Working Act 2023 and Carers’ Leave Act 2023 already assist with flexible working and caring responsibilities. It states its approach is to focus on outcomes for firms rather than specifying interventions, but will provide support where a regulatory view is needed.
HM Treasury
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13
Rejected
Para 79
Encourage firms to undertake equality impact assessments on flexible working policies.
Recommendation
We recommend that the Government and regulators encourage firms to undertake equality impact assessments on their flexible working policies and the interaction with diversity and inclusion within their firm.
Government Response Summary
The government explicitly rejects the recommendation to encourage firms to undertake equality impact assessments on their flexible working policies, stating it has not assessed their impact and has no plans to require them.
HM Treasury
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14
Accepted in Part
Para 80
Encourage firms to advertise flexible and part-time roles to attract diverse talent.
Recommendation
We recommend that the Government and regulators encourage firms to advertise as many roles as possible to be available on flexible and part-time bases, as a way to attract and retain as wide a talent pool as possible, especially women.
Government Response Summary
The government previously decided against legislating to require employers to list flexible working opportunities in job adverts. Instead, it is actively promoting the 'Happy to Talk Flexible Working' initiative and notes that new legislation enabling employees to request flexible working from day one should encourage discussions.
HM Treasury
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15
Accepted
Para 81
Progress in supporting employees affected by menopause requires further action.
Recommendation
Welcome progress has been made in recognising the effect of the menopause and in identifying ways of assisting those affected to overcome the challenges it presents without having to leave their jobs. That progress, as in other areas of this …
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Government Response Summary
The government described ongoing actions to support women affected by menopause, including the appointment of a Menopause Employment Champion and her Four Point Plan, new DWP guidance, and identifying menopause as a priority in the Women's Health Strategy.
HM Treasury
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16
Accepted
Encourage firms to establish menopause policies and support to retain talent.
Recommendation
We recommend that Government continue to encourage firms to recognise the impact of menopause and to establish policies and support for those who are affected to ensure that their experience and talents are not prematurely lost from the industry. (Paragraph …
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Government Response Summary
The government has accepted this recommendation, highlighting actions such as appointing a Menopause Employment Champion, promoting her Four Point Plan, launching new guidance on the Help to Grow portal, and prioritizing menopause in the Women’s Health Strategy to encourage employer support.
HM Treasury
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18
Accepted
Para 105
Require PRA and FCA to review bonus cap removal impact on gender pay inequality.
Recommendation
Given that gender bonus gaps are typically even larger than gender pay gaps, we are concerned that the removal of the bankers’ bonus cap could increase the difference between the overall take-home pay of men and women in financial services, …
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Government Response Summary
The PRA has committed to monitoring the effects of the bonus cap removal on remuneration structures, and the FCA will work with the PRA to review its impact on gender pay and inequality at the earliest opportunity once sufficient evidence is available.
HM Treasury
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20
Rejected
Para 107
Strengthen pay gap reporting regulations for firms with large gaps and reduce reporting threshold.
Recommendation
We therefore recommend that the Government strengthens the pay gap reporting regulations to incentivise firms to make faster progress. Specifically, we recommend it be made mandatory for firms with a pay or bonus gap above a certain threshold to publish …
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Government Response Summary
The government rejects both recommendations to strengthen pay gap reporting. It states it is too soon to make changes and argues that mandatory action plans for firms with high gaps would be unfair, ineffective, and burdensome, while reducing the reporting threshold to 50 employees poses statistical and practical challenges.
HM Treasury
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22
Rejected
Para 109
Lack of pay transparency exacerbates and perpetuates gender pay gaps
Recommendation
We have heard compelling evidence that a lack of pay transparency, particularly at the recruitment stage, exacerbates and perpetuates gender pay gaps. It is vital that employees are paid based on their experience, skills and value to an organisation, rather …
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Government Response Summary
The government rejected moving directly to legislation for pay transparency, explaining it would not allow sufficient time for organisations to adjust, could cause backlash, and that it wants to learn from the experiences of other countries before committing to such a measure.
HM Treasury
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23
Rejected
Introduce legislation to mandate salary bands on job adverts and ban salary history requests
Recommendation
While we recognise the Government’s plans for a pay transparency pilot as a first step to exploring these issues, we are concerned by the lack of progress since the pilot was announced two years ago. Given the very clear case …
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Government Response Summary
The government rejects legislating to mandate salary band inclusion in job advertisements and ban salary history requests, stating it is not appropriate at this time due to potential employer difficulties, risk of backlash, and unknown negative impacts, preferring to learn from other countries' experiences first.
HM Treasury
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30
Acknowledged
Para 162
Clarify enforcement collaboration between EHRC and FCA on Worker Protection Act
Recommendation
Given the potential overlap between the aims of the Worker Protection Act, which will be enforced by the Equality and Human Rights Commission (EHRC), and the proposals by the Financial Conduct Authority (FCA) on handling sexual misconduct in financial services, …
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Government Response Summary
The government states it has a Memorandum of Understanding with the EHRC and will continue to work together and share information to address common interests, but does not outline a specific plan for clarifying enforcement of the Worker Protection Act.
HM Treasury
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33
Deferred
Launch an awareness campaign to publicise FCA whistleblowing line and clarify its use.
Recommendation
We recommend that the FCA launches an awareness campaign to publicise the availability of its whistleblowing line and clarify the circumstances in which it can be used, including that nothing in a non-disclosure agreement can prevent an individual from reporting …
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Government Response Summary
The government states it is considering how to improve its whistleblowing approach and public communication, including whether a new publicity campaign would be helpful, while noting a similar campaign was launched in March 2021.
HM Treasury
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35
Accepted in Part
Para 167
Introduce legislation to ban the use of non-disclosure agreements in harassment cases.
Recommendation
We are pleased that the Government is looking at ways to prevent this abusive use of NDAs, and we recommend the introduction of legislation to ban the use of NDAs in harassment cases.
Government Response Summary
The government shares concerns about NDA misuse and is taking steps, including legislation to clarify NDAs cannot prevent reporting a crime or discussing criminal conduct, but it has not committed to a full ban on NDAs in harassment cases.
HM Treasury
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36
Accepted
Collect data on non-disclosure agreement use by regulated firms in misconduct cases.
Recommendation
In the meantime, we recommend that the FCA collect data on the use of NDAs by regulated firms in cases of non-financial misconduct. This will provide a more detailed, quantitative picture of the extent of their use in financial services …
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Government Response Summary
The government states that the FCA recently issued a non-financial misconduct survey to wholesale firms to collect data on the use of confidentiality agreements in relation to various misconduct types, and they are currently assessing the responses.
HM Treasury
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Conclusions (19)
1
Conclusion
Acknowledged
Our inquiry has revealed incremental improvements for women working in financial services on certain metrics, such as the proportion of women holding senior roles. Overall, there has been a disappointing lack of progress on sexual harassment and bullying, including serious sexual misconduct. Despite the best efforts of some far too …
Government Response Summary
The government welcomed the report and agreed with the Committee's observations about the importance of diversity and inclusion, and the slow progress towards gender balance, but committed to no new specific actions.
2
Conclusion
Rejected
Para 42
There have been some positive signs of improvement in the senior representation of women in some firms and sectors within financial services since 2018. We commend both the Financial Conduct Authority and the Bank of England for leading by example in significantly increasing female representation at their most senior levels. …
Government Response Summary
The government agreed that progress is slow but rejected expanding the scope of the Women in Finance Charter, citing increased burden on firms. It stated it would continue to encourage signatories and engage with them to explore other ways to improve progress.
3
Conclusion
Rejected
Para 43
The Treasury’s Women in Finance Charter has played an important role in driving the conversation on gender diversity and increasing accountability for signatory firms. Even so, progress on increasing female representation has been too slow. We believe that the scope of the Charter should be extended to help drive more …
Government Response Summary
The government agrees that a strong female talent pipeline is key but rejects extending the scope of the Women in Finance Charter, arguing it would increase the burden on firms and potentially deter new signatories. It will, however, explore other means to gather insights.
4
Conclusion
Rejected
Para 44
In particular, the focus of the Charter on female representation at just the senior management level is too narrow. There needs to be greater focus on ensuring there is a pipeline of female talent to support long-lasting, sustainable improvement in gender diversity in the sector. We therefore recommend that the …
Government Response Summary
The government agrees on the importance of a female talent pipeline but rejects extending the Women in Finance Charter to cover different seniority levels, stating it would increase the burden on firms and potentially deter new signatories. It plans to seek alternative methods to gather insights.
5
Conclusion
Accepted
Para 45
We heard that linking senior executive pay and bonuses to performance on diversity and inclusion can be an effective way to incentivise change, though this practice is not currently widespread. One of the Women in Finance Charter principles is for firms to have an ‘intent’ to link pay to delivery …
Government Response Summary
The government agrees that linking executive pay to diversity performance is effective and states that a 'comply or explain' mechanism for this is already central to the Women in Finance Charter, with 84% of signatories currently having such a link and ongoing monitoring.
9
Conclusion
Rejected
Para 75
It is clear that maternity remains a significant barrier to women in financial services, with too many women leaving the industry after having children. We have heard that increased availability and take-up of paternity leave and shared parental leave by men can have a significant impact on reducing this barrier …
Government Response Summary
HM Treasury notes it previously consulted on requiring large employers to publish family-friendly policies but concluded against a 'one-size-fits-all' approach, effectively rejecting mandatory transparency. The PRA and FCA acknowledge the importance of parental leave but defer broader transparency questions to the government.
12
Conclusion
Accepted
Para 78
There are also risks that women lose out on promotion or pay progression possibilities if the change in practice towards hybrid and remote working is not accompanied with a change in the culture of firms and the mindset of managers towards ensuring equal opportunity and treatment between those who work …
Government Response Summary
The government agreed with the risks identified and highlighted the Flexible Working Act 2023 and Carers’ Leave Act 2023 as already addressing related issues. It also noted its consultation proposals encourage firms to identify and address barriers, potentially including flexible working initiatives.
17
Conclusion
Rejected
Para 104
The financial services sector is well paid compared to many other industries, but it has the largest gender pay gap of any sector in the UK economy and that pay gap is reducing at such a glacial pace that it could take 70 years to close it at the current …
Government Response Summary
The government agrees reporting alone is insufficient but believes it is too soon to change requirements and rejects the idea of mandatory action plans, arguing they would be unfair, ineffective, and burdensome for businesses.
19
Conclusion
Rejected
Gender pay gap reporting has increased transparency around pay gaps, but it has not incentivised firms to take action to reduce pay gaps in the way that had been hoped and we are concerned by the evidence we heard that suggests large pay gaps in financial services have come to …
Government Response Summary
The government agrees reporting alone is insufficient but believes it is too soon to change requirements and rejects the idea of mandatory action plans, arguing they would be unfair, ineffective, and burdensome for businesses.
21
Conclusion
Rejected
Para 108
We repeat our predecessor Committee’s recommendations that the Government considers amending the pay gap reporting guidance so that partners’ remuneration is included, and that the granularity of pay gap reporting be increased to provide more clarity around where pay gaps exist within firms and incentivise more targeted action to reduce …
Government Response Summary
The government rejects amending pay gap reporting regulations to include partners' remuneration or increase granularity, preferring that further analysis remains voluntary. It notes that many firms already voluntarily publish partner data and that new guidance offers recommendations for additional, voluntary calculations.
24
Conclusion
Acknowledged
Para 156
We have been appalled by testimonies we have received about the prevalence of sexual harassment in the financial services industry, including from some of the brave women who told us about their experiences at our own private roundtable event. Although sexual harassment against women is a societal problem, it is …
Government Response Summary
The government welcomes the Committee's report, agrees that regulators have an important role in promoting diversity and inclusion, and is prioritizing work on non-financial misconduct, including sexual harassment and bullying.
25
Conclusion
Acknowledged
Firms need to adopt a zero-tolerance approach towards sexual harassment and abuse and take concrete action to embed this approach within their organisations. Impunity for perpetrators, who are often well known in their organisations for serial offending, must end. As well as being the right thing to do, several high- …
Government Response Summary
The government welcomes the report, agrees on the regulators' role in promoting diversity and inclusion, and is prioritizing work on non-financial misconduct, including sexual harassment and bullying, while considering consultation responses to their D&I proposals.
26
Conclusion
Deferred
Para 158
It is also important that firms tackle the ‘softer end’ of abusive behaviour and ‘microaggressions’ against women in order to create an inclusive culture in which even low-level bullying or harassment is seen as unacceptable. Firms should consider what steps they can take to achieve this, including the use of …
Government Response Summary
The government acknowledges the importance of tackling abusive behaviour and microaggressions, stating they are currently prioritising work on non-financial misconduct and will set out their final policy after reviewing consultation responses.
27
Conclusion
Deferred
Para 159
It is vital that sexual harassment is viewed as a problem for everyone to solve, including men. Firms should do all they can to develop a culture in which men are encouraged and incentivised to act as allies and role models, and where men as well as women are encouraged …
Government Response Summary
The government agrees on the importance of promoting diversity and inclusion in the financial sector and is prioritising work on non-financial misconduct, stating they will consider next steps and publish their final policy after reviewing consultation responses.
28
Conclusion
Deferred
Para 160
We have heard that whistleblowing processes within financial services firms are often ineffective at tackling bad behaviour or protecting those who report harassment. The Government is undertaking a review of whistleblowing laws, and we strongly recommend that the Government seeks to strengthen whistleblowing legislation to provide greater protection and support …
Government Response Summary
The government recognises the value of whistleblowers and notes existing legal protections under PIDA, stating they are currently reviewing the whistleblowing framework to inform future policy choices for its development and improvement.
29
Conclusion
Deferred
Para 161
The new Worker Protection Act imposes a new duty on firms to prevent sexual harassment. We hope that this legislation has the desired impact of incentivising firms to take greater action to prevent harassment in the workplace, and we will monitor closely its effectiveness at reducing cases of sexual harassment …
Government Response Summary
The government stated that the EHRC is responsible for enforcing the new duty on employers and that they are already in contact and have a Memorandum of Understanding to work together and share information.
31
Conclusion
Acknowledged
Para 163
There is an important role for regulators to play in ensuring that firms tackle sexual harassment. We welcome the proposals by the Financial Conduct Authority and by the Prudential Regulation Authority to strengthen their regimes for tackling non-financial misconduct, including sexual misconduct. We note, however, that the regulators are constrained …
Government Response Summary
The government agrees with the committee on the important role regulators play in promoting diversity and inclusion, and is currently reviewing consultation responses from various stakeholders before publishing its final policy.
32
Conclusion
Acknowledged
Para 164
There is limited awareness of the FCA’s whistleblowing line or how it works, and we believe there is scope to enhance its effectiveness and reduce the ‘fear factor’ victims of harassment face when reporting abuse.
Government Response Summary
The government acknowledges the limited awareness and 'fear factor' around the FCA's whistleblowing line, stating they are currently considering improvements to their approach and communication, including the potential for a publicity campaign.
34
Conclusion
Accepted
Para 166
The widespread misuse of non-disclosure agreements (NDAs) in sexual harassment cases is shocking. NDAs have the effect of silencing the victim of harassment when they are forced out of an organisation, while protecting the perpetrator and leaving them free to continue their career.
Government Response Summary
The government shares concerns about NDA misuse and is taking action, including the Higher Education (Freedom of Speech) Act 2023 which prevents NDAs in certain misconduct cases, and has committed to legislation clarifying NDAs cannot prevent reporting a crime.