Sexism in the City

In July 2023 the Treasury Committee launched an inquiry into sexism in the city. We responded to the call for evidence and our full response is copied below. Details of the inquiry can be found here: 

Our response to the call for evidence​

About SEEN in the City
‘SEEN in the City’ is a network of people who work in the financial services sector and advocate for rights and protections that relate to sex. SEEN is an acronym for Sex Equality & Equity Network. Our aims include promoting and supporting sex equality and equity between women and men in our workplaces. This includes seeking to combat sexism, sex discrimination and sexual harassment at work but also discrimination and harassment on the basis of sexual orientation. We are also committed to the protected belief that biological sex is binary and immutable, that biological sex matters for both women and men in our everyday lives, including for our rights and needs in the workplace and should not be conflated with gender or gender identity. Nonetheless, our position is that workplaces should be able to accommodate employees with a range of beliefs about sex and that freedom of belief in this area is important to support and be seen to support.

Our members span a range of larger and smaller firms including retail banks, investment banks, insurance companies, brokerages, law firms and regulators. Our members work in a range of roles and have a range of skills, specialisms and differing levels of seniority. We are a national network covering all of the UK and have members in a range of locations.

Our network includes women and men and is not women-only although much of our work is focussed on addressing inequalities for women including lesbians.

We are seeking to help our members address sex inequality and discrimination within their organisations and broader society. The term sex has largely been replaced with the term gender as a polite euphemism within the financial services sector and within diversity and inclusion efforts. However, this causes problems; given that there are comparatively few women in senior positions, the inclusion of even a small number of men who identify as women in reporting, statistics and analysis skews the statistics. A focus on gender rather than sex also leads to the reification of gendered stereotypes for women within the industry. Many well-intentioned diversity initiatives focus on “fixing” or changing women’s behaviour to adapt to more masculine stereotypes of assertiveness, ambition and outspokenness or encourage women to focus on more traditionally feminine behaviours such as empathy, communication and people skills. Both of these approaches require women to adapt rather than addressing structural barriers and fail to account for the infinite variety of skills and talents within the workforce which do not divide along traditionally gendered roles.

We are aware of at least one other SEEN for those working in the Civil Service ( but we are the only such network for financial services professionals.

SITC’s Response to the Call for Evidence
The business benefits of diversity (for example in terms of financial results, innovation and risk management) are well documented and crucial to this sector. Regrettably, however, the barriers identified by the Committee in 2018 still remain and progress has been very slow. Our members report that they remain surrounded predominantly men, with limited representation of women at senior levels and in revenue generating roles and many of ’s members have experienced or observed sexism in the workplace. SITC therefore welcomes the Committee’s interest in this important topic.

SITC’s response is structured as follows:

  1. Executive summary
  2. Requirement for an evidence-based approach to DE&I
  3. Organisational systems and culture: inequality of opportunity and structural bias
  4. Organisational culture: workplace conduct
  5. Detrimental impact of maternity leave
  6. Lack of flexibility
  7. Impact of existing Government initiatives: Gender Pay Gap reporting
  8. Impact of existing industry initiatives: Women in Finance Charter
  9. Conclusion

1. Executive summary
1.1 Large numbers of women have entered the sector over a long period of years. While some barriers to entering the sector remain (including the sector’s reputation), the real issue is not at the recruitment stage. Rather, it is the culture that women encounter once they enter the sector, which results in a lack of equal opportunity for progression, coupled with high levels of female attrition.

1.2 One barrier to female progression is that women are still more likely to take time out of their careers for children, and to bear an unequal share of the burden of managing family and caring responsibilities alongside working. This is often cited as a reason that women are underrepresented in leadership positions. We believe that women are often unfairly held back as a result of pregnancy, maternity leave and caring responsibilities. However we also believe that this is not the only issue or even the primary issue. There are other fundamental structural challenges faced by women which have not been fully recognised and addressed.

1.3. It is clear from research from organisations such as McKinsey that maternity and child care does not account for the significant, persistent gender pay and promotion gaps in many organisations. McKinsey’s 2022 Women in the Workplace Report (“the 2022 McKinsey Report”) noted that women were just as likely as men to want to be promoted and aspire to senior level roles, but “experience microaggressions that undermine their authority and signal that it will be harder for them to advance… are far more likely than men in leadership to have colleagues imply that they aren’t qualified for their jobs and are twice as likely as men leaders to be mistaken for someone more junior.

1.4 Some firms have tried to address the imbalance through a focus on recruitment, and a range of Diversity, Equity and Inclusion (DEI) initiatives such as training, policies and mentoring programmes and initiatives focused on topics that specifically affect women such as menopause. These types of programmes enable the firm to be seen to be taking some action, to report positively as part of the DEI section of the ESG banner, and gain points in external indices. SITC considers that these programmes can have positive benefits for women, but the real test is whether they drive an inclusive culture in which women thrive and progress. Regrettably, this is not the case. Indeed while initiatives relating to menopause are well meaning, they do not address the underlying problems, or the fact that many women have left the sector by then. In addition these initiatives can increase stigma against older women.

1.5 All too often programmes are well-intentioned, but fragmented, and do not tackle the fundamental st
ructural issues that exist within the sector and do not achieve long-term culture change. As such they are perceived by many women as window dressing.

1.6 The view of our members is that the real barriers are cultural and structural and include inequality in allocation of work and opportunities, bias in the assessment of women, lack of transparency in promotion processes, lack of pay transparency, presenteeism and lack of recognition for the differing levels of contribution made by women and men to positive workplace behaviours (which we address later in this response).

1.7 Our experience is also that DE&I resource and funding is under pressure, and as a result, the issues facing women can be overlooked or underplayed. In some firms women’s networks have been converted into “gender diversity” networks and there is no space or resource devoted to looking at the issues facing women or why existing initiatives have not worked.

1.8 Our starting point is that rather than devote resource to fragmented and eye-catching initiatives, league tables etc, firms need to apply an evidence based approach to DEI. This should start with a better understanding of what is not working in their own organisations, at every point in the employee life cycle, in order to identify where the true challenges are, and address them.

1.9 Further, existing industry and government initiatives such as the Women in Finance Charter (WIFC) and the legal requirement for Gender Pay Gap Reporting have not led to material improvements. A particular concern is the lack of hard measures and accountability in programmes such as the WIFC, and the fact that there is no requirement on firms to address the material gaps disclosed under the Gender Pay Gap Reporting Regulations.

2. Requirement for an evidence-based approach to DE&I
2.1 As noted in Section 1, our starting point is that firms need a better understanding of what is not working in their own organisations. Surprisingly few apply a data-informed and evidence-based approach. Many measure simple metrics, such as diversity of senior management and the workforce as a whole but do not look in granular detail at where the problems lie in the employee life cycle.

2.2 Organisations need to systematically collect and leverage the data to metaphorically “look under the bonnet”, and really understand what is going on, not just on recruitment, but at every stage of decision making from intake to annual evaluation, pay and bonus, promotion, allocation of work and opportunities and through to leaver data. For example:

  • Do women tend to score lower than men on certain evaluation criteria in the performance appraisal system or the promotion process? If so which? Since it is unlikely that men as a group consistently outperform women, data indicating disparity in scoring is a key indicator that something is wrong either with the criteria or something structural in the business and the need for further investigation and to to address this.
  • Does the allocation of projects or client relationships opportunities tend to result in men having better, more high profile opportunities?
  • If anomalies are identified, firms should then undertake a deeper dive to understand why – for example whether this relates to manager perceptions or another structural problem.

2.3 Data protection is often cited as a reason why this type of systematic evidence based approach is not done. However while UK GDPR may limit the ability to publish granular data e.g. in respect of promotion, attrition, redundancies etc, it does not inhibit the ability to undertake this exercise internally. Firms should have good data on sex, and have the ability to undertake systematic data analysis looking at key aspects of the employee life cycle. This analysis could be undertaken by DEI / HR teams, in order to identify specific issues, and help focus resources on the areas of greatest challenge and measures with the greatest success.
2.4 One recommendation could be to introduce a regulatory requirement to share this type of data with the relevant regulator(s) on a confidential basis, with firms being required to explain what steps are being taken to address the issues identified.

2.5 SITC also notes that in this regard it is important that the firms and regulators use the correct terminology and collect data on sex which is the relevant protected characteristic in the Equality Act 2010, and not on gender which is not a protected characteristic. The relevant protected characteristics for these purposes are sex and gender reassignment. The conflation of these two protected characteristics not only diminishes the value of the data, but also has the effect of introducing self-identification of gender (Gender Self ID). SITC notes that the UK 2021 Census collected data on sex and gender identity separately. Indeed, the distinction between the two categories was considered sufficiently important by the UK Courts to justify granting permission for a judicial review of the Office for National Statistics’ (ONS) guidance on how to complete the Census, which appeared to permit participants to answer the sex question based on Gender Self ID. The Court also made an interim order that the relevant part of the guidance be amended, following which the ONS agreed to change the guidance on a permanent basis. This approach was then followed by the Solicitors Regulation Authority (SRA).

2.6 SITC recommends that any FCA or other regulatory requirement to collect and provide data should not aggregate data on sex and gender. First, under GDPR there is a clear basis for collecting data on sex, whereas that is not the case for “gender” which is arguably special category data. Second, collecting data on a disaggregated basis in relation to each protected characteristic would ensure that firms and regulators have better quality data for the purposes of their policy and decision making. It would also ensure that regulators are able to comply with their public sector equality duty under the Equality Act 2010, which requires them to “advance equality of opportunity between people who share a protected characteristic and those who do not share it”.

2.7 Policy making that seeks to conflate two protected characteristics (sex and gender reassignment) or introduce the concept of gender, which is not a protected characteristic, would fail to advance equality of opportunity between those who share one of those protected characteristics and those that do not.

2.8 SITC also notes that many of those with gender critical beliefs (which is itself a protected characteristic under the Equality Act) reject the concept of gender, believing that it is based on the imposition of stereotypes on each sex. Any requirement on or by firms to require those individuals to identify their “gender” is therefore potentially discriminatory as it would require individuals to identify themselves as something that (as a result of their protected belief) they do not consider exists. Further, as it is not a protected characteristic, there is no legitimate reason to collect and report gender under GDPR – the appropriate terms are as noted, sex and gender reassignment.

3 Organisational systems and culture: Inequality of Opportunity and Structural Bias
3.1 A key reason that existing initiatives have not worked is that they do not tackle some of the fundamental cultural issues in the sector. We address these further below.

3.2 The 2022 McKinsey Report states that “for years, fewer women have risen through the ranks because of the “broken rung” a
t the first step up to management.
” They take the view that the first step is crucial. As noted elsewhere in our response, maternity and child care responsibilities may impact promotion, but we believe that many women miss out on this first promotion well before they take maternity leave.

3.3 Diversity initiatives typically focus on improving the balance at more junior, entry level roles and on changing women’s behaviour to adapt to a male-dominated workplace, through training on confidence, assertiveness etc, whereas there is little focus on removing structural and behavioural barriers to progression and promotion for women such as methods for allocation of work and opportunities, promotion processes, lack of pay transparency, and presenteeism, and the differing levels of contribution made by women and men to positive workplace behaviours.

3.4 The committee’s previous recommendations included encouraging training to remove unconscious bias from managers. Unconscious bias training has become fairly ubiquitous across the financial sector, however it has so far proved impossible to remove bias, and there is no evidence that these training sessions have the desired impact. Indeed some studies show that they reinforce bias. There needs to be more concrete action to address the actual barriers to promotion. This should include minimising individual manager discretion in the assessment for promotion and opportunities and that women are assessed fairly and objectively.

3.5 The committee’s 2018 report also stated that “women lack confidence”. SITC does not accept this as a general proposition. We agree that some women’s confidence can be severely damaged as a result of their treatment at work, including the fact that their male peers are often granted better opportunities and progress at much greater rates. However many women are confident in their skills and ability to progress and in their worth. We do not therefore accept that lack of confidence explains lack of progression.

3.6 Further, there is evidence that women receive significantly more negative personality feedback for the same behaviours than men. For example women are sometimes told they lack gravitas, but when they speak more impactfully or behave more assertively in a way that would be praised in men, they receive feedback that they are aggressive or non collaborative or not open to others views. Removing personality feedback from performance reviews and assessments would help to address these issues.

3.7 The 2022 McKinsey report also noted that “women leaders do more to support employee well-being and foster DEI”, but although this contribution “dramatically improves retention and employee satisfaction”, it is not formally rewarded in most companies. McKinsey noted that 40 percent of women leaders say their DEI work isn’t acknowledged at all in performance reviews. As McKinsey comment, spending time and energy on work that isn’t recognized could make it harder for women leaders to advance and means that women leaders are stretched thinner than men in leadership. While women take responsibility for team wellbeing, men have more time to spend on activities that will enhance their careers. This phenomenon is also experienced by ethnic minorities.

3.8 Against this background, there is a need for structural/process change. Recommendations could include:

  • That firms re-examine their approach to promotion and skills criteria, consider whether they are genuinely objective and unbiased and fully reflective of the needs of the business and using data to establish whether any of the criteria disadvantage women.
  • That personality feedback is removed from performance reviews and assessments.
  • A requirement that everyone at a certain level with 2 years’ tenure should be considered in a promotion pool for the next step up and assessed against transparent and objective criteria rather than individuals being selected by managers who may be biased.
  • If fewer than 50% of those selected from the pool are women, these decisions need to be explicitly justified.
  • That firms examine their approach to work, project and client allocation, to establish whether these are wholly objective and using data to consider whether the processes involved disadvantage women.
  • Positive contribution to DEI and good people management practice should be rewarded (and this should be transparent)

4 Organisational culture: Workplace conduct
4.1 We note that despite efforts in some firms to tackle harassment (including sexual harassment) and bullying, incidents of this continue to occur even amongst the most senior. Regrettably these are often ignored or tacitly condoned by senior management, especially in cases of star performers. A recent example is that of Crispin Odey who is currently under investigation by the FCA over allegations that he harassed women over several decades. In 2022 Lloyd’s of London in its role as regulator fined the underwriting firm Atrium following a systematic campaign of bullying” by a male employee whose behaviour was well known at the firm, including by senior managers who failed to take adequate steps to address the problem. Lloyd’s also criticised the firm’s practice of an annual “Boys Night Out” involving inappropriate initiation games and heavy drinking, and sexual comments about female colleagues that Lloyd’s said were both “discriminatory and harassing” to members of staff and condoned by senior executives present. These high profile examples are the tip of the iceberg. Many women report repeated incidents of bullying and harassment.

4.2 This is an important cultural issue. It is a barrier to women entering and remaining in the profession and it also represents a key regulatory risk to organisations. A firm with a high incidence of bullying and harassment, where individuals have found it difficult to raise these issues, and where colleagues have not intervened is unlikely to be a firm which values diversity, or which is truly inclusive. Nor is it likely to be a place of psychological safety, or a firm where individuals feel able to speak up and challenge, both of which we consider to be a fundamental requirement for proper risk management.

4.3 Members report that individuals are afraid to report incidents. This reflects a range of reasons including:

  • the often lengthy, defensive and combative nature of the internal investigations process which can result in individuals feeling unsupported and isolated;
  • concerns that the focus of the firm is on defending the organisation rather than rooting out the problem and that the firm will not take the appropriate action or treat the behaviour with sufficient seriousness;
  • perpetrators frequently hold positions of power and may be material revenue generators resulting in concerns that the firm will not take action and/or the risk of retaliation;
  • concern that reporting will be career limiting, because confidentiality will not be maintained and that it will be difficult for the complainant to either remain in the organisation or to move on. While the sector as a whole is large, in many business lines it is in reality a very small world.

4.4 Many individuals therefore consider that reporting, whether to the firm or the relevant regulator, is a high risk decision and they choose to leave rather than to report.

4.5 In addition to bullying and sexual harassment, members also report a strongly emerging hostile culture to those who have gender critical beliefs. While many men are gender critical, it is notable that those suffering harassment are predominantly female. It is important in a diverse and inclusive organisation to encourage diversity of thought, and a culture of everyday challenge and speaking up. That is particularly the case in the financial services indust
ry and other regulated sectors. It is therefore all the more concerning to note that any discussion of the gender critical topic is closed down. Our members report that there are negative consequences, for example, when they seek to clarify the distinction between the protected characteristic of sex and “gender”, when they criticise removal of words such as “mother” and “woman” from maternity policies, and more broadly when they raise concerns about the way this topic is discussed in their organisation. Women face sanctions and even loss of their jobs if they speak up on this issue. Firms have not yet fully recognised that gender critical beliefs are protected, or their important role in ensuring that they can be expressed.

4.6 From a regulatory perspective, SITC notes that material rule breaches related to work and dishonesty offences unrelated to work are clearly regarded as relevant to integrity for the purposes of the fit and proper assessment. We consider that similarly, serious non-financial misconduct including sexual misconduct, harassment and bullying (both inside and outside the workplace) is relevant to an individual’s moral compass, and in turn to culture and so depending on the seriousness, may amount to a conduct rule breach (and specifically the duty to act with integrity) and be relevant to an individual’s integrity for the purposes of the fit and proper assessment. We consider that this is particularly the case for senior individuals who need to understand how culture and tone are “set from the top”.

4.7 It was recently reported that the Financial Conduct Authority has received 43 reports by whistleblowers over sexual harassment within financial services in the past five years. SITC is concerned that this is not a true reflection of the number of incidents in the regulated sector. While it may be that some individuals do not report to the FCA because the matters are handled appropriately by their firms, that does not fully reflect our experience. We also note that some individuals may not be aware that harassment and bullying are “reportable concerns” for the purposes of the FCA and PRA Whistleblowing framework.

4.8 In the legal sector, the SRA code of conduct expressly requires that all individual solicitors, treat colleagues fairly and with respect, and do not bully or harass them or discriminate unfairly against them. The SRA also recently introduced a requirement on senior managers to challenge behaviour that does not meet this standard. SITC would like to see these obligations extended across the financial services industry. Regulators need to be clear that failure to create a culture where individuals are able to report inappropriate behaviour, to step in when inappropriate conduct is observed, and to take prompt action when it is reported, will have serious consequences for the firm and its senior management.

4.9 SITC notes that the FCA does in principle take sexual harassment seriously and has regularly commented that such misconduct is potentially relevant to fitness and propriety. As noted above, In addition, in 2022 LLoyd’s of London also (in its role as regulator) fined the underwriting firm Atrium in relation to bullying and harassment. However there is a lack of guidance and consistency from regulators and therefore firms are sometimes unclear as to the regulatory expectations. This means that across the industry, there is a lack of consistency of approach to either the internal sanctions within the firm (including warnings, dismissal, and malus and forfeiture under incentive plans) and the regulatory fit and proper assessment and impact for regulatory references. This highlights the urgent need for clarity in this area.

4.10 SITC members also report that firms continue to use non-disclosure agreements (NDAs) as a routine matter when settling claims of harassment and bullying. As a result there is a lack of transparency. In 2019 the Equality and Human Rights Commission issued guidance noting that “In some circumstances confidentiality agreements have been used to cover up the worst instances of discrimination. There is also evidence, including from the Equality and Human Rights Commission’s own enforcement work, to suggest that the inclusion of confidentiality agreements in terms and conditions or settlement agreements has become commonplace. This can prevent workers from speaking about their experiences, create confusion as to what they can and cannot say, and make them fearful about what will happen if they do speak up. The use of confidentiality agreements impacts on the culture of an organisation as a whole and not just on the workers who sign them. Workers will be encouraged to share their experiences if others have done so first; silencing those who have felt able to raise their concerns will deter others from coming forward.“ The EHRC therefore recommended that employers should not use NDAs as a matter of course and should instead consider case by case whether there is a need for a limitation, for example where that is requested by the victim of discrimination. Despite this recommendation, few organisations have adopted the guidance.

4.11 SITC agrees with the EHRC that NDAs should not be used as a matter of routine. It also considers that firms should have an obligation to collate and report to the Board and to the relevant regulator details of all alleged harassment and bullying, including the outcomes and whether the complainant and the allied perpetrator remained at the firm.

4.12 SITC would therefore like to see the following outcomes:

  • Express regulatory obligations for firms to address inappropriate conduct at work.
  • Clarity from regulators on the impact for firms and individuals including guidance as to the implications for the fit and proper assessment.
  • Enforcement action by regulators against firms that fail to act.
  • Ban on routine use of NDAs and a requirement to report their use and the reasons case by case.
  • Requirement to log and report to the Board and the regulator allegations of harassment and bullying, outcomes, and action taken.

5 Detrimental Impact of Maternity Leave
5.1 Women commonly report that their careers flatline after maternity leave. Restructuring and redundancies are a regular occurrence in the sector and it is not uncommon for women to find that their roles are made redundant during or shortly after maternity leave. Even where the job remains, women frequently report that their opportunities become more limited – for example that men are allocated the more high profile accounts, clients and opportunities. Firms do not always ensure that women retain the same clients and projects after maternity leave. In addition, firms will claim that decisions on promotion, redundancy etc are objective and based on performance, but when reviewing performance for these purposes, firms do not take into account the impact of ramping down prior to maternity leave and ramping up afterwards or the opportunities they have returned to. The system can therefore be biased against women.

5.2 SITC would like to see firms provide more granular data on promotion and redundancies, based on sex and on whether employees have taken maternity leave. Firms should also be required to conduct an Equality Impact Assessment on redundancy.

5.3 Measures which could help with reducing attrition during and after maternity leave, include maternity coaching and mentoring to build a support network and publishing family leave policies on corporate websites so that jobseekers have access to that information prior to interview.

5.4 Many promotion processes require several consecutive years minimum performance grade to be considered, however if women take maternity leave this may disrupt the consecutive years despite high achievement whilst at work. This contributes to gender pay gap and progression gap as women t
ake longer to reach the next step of their careers.

5.5 In the cases of unfair dismissal during pregnancy or maternity leave and discrimination relating to pregnancy and maternity, the three month timeline to submit a claim is prohibitive for women who will be recovering from birth and caring for a newborn. This significantly reduces the ability for women to have any redress in the event of discrimination.

5.6 There needs to be more encouragement for men to take paternity leave and shared parental leave (while not diminishing the fact that women who have given birth require leave for the additional reason of physical recovery among other matters which would not be applicable to men and this is important to recognise). Whilst the statutory policies are complex, there is best practice in the industry of making access to leave equal across both sexes and it is entirely possible to offer a benefits package which is more generous than statutory. In addition, men should in practice have equal access to flexible and part-time working.

6 Flexibility
6.1 The financial services sector has a strong reputation for presenteeism and long hours working culture including client entertainment and alcohol consumption. This can be alienating to those with caring responsibilities and those whose religion or culture prohibits consumption of alcohol. The impact of covid saw a sudden move to remote working across the sector even in roles which were previously considered incompatible such as front-line sales and trading roles. However post-pandemic, there has been a considerable push across the sector to reduce remote working with frequent and sudden changes of acceptable working pattern implemented at very short notice. These decisions appear to have been taken without consideration of the impacts on those with caring responsibilities, childcare arrangements etc and risk women leaving the sector if they are unable to adapt quickly.

6.2 The 2022 McKinsey Report noted that only one in 10 women want to work mostly on site and said that “many women point to remote- and hybrid-work options as one of their top reasons for joining or staying with an organization”. Notably, McKinsey said that these preferences do not only related to flexibility and child care: “When women work remotely at least some of the time they experience fewer microaggressions and higher levels of psychological safety.

6.3 SITC would therefore like to see greater support for flexible and remote working, and firms to take a more proactive approach to ensure that remote working is inclusive and successful.

7 Impact of existing Government Initiatives: Gender Pay Gap Reporting
7.1 The UK Gender Pay Gap Reporting requirements have not in practice made a material difference to progress. Typically firms in the sector have a material gender pay gap. This is normally explained by the firm as reflecting the lack of women in senior and revenue generating roles, and accompanied by positive statements about the commitment to change. There is an overwhelming acceptance within the industry that the status quo reflects wider societal trends. As such, progress towards equal representation is slow and even many quoted allies do not consider this a reasonable goal. Crucially there is no requirement on firms with a large pay gap to take action or to consider why previous initiatives have not led to sufficient progress, nor is there any naming and shaming. Firms may feel mildly uncomfortable about their gap, but because it is industry wide there is safety in numbers.

7.2 SITC would like to see a number of reforms including:

  • A requirement on firms to publish and report against a formal action plan.
  • Reporting of data by division/business lines.
  • Reporting of data on promotion, redundancies and other exit data including voluntary leavers, early retirements and maternity return data
  • Extension of the reporting requirements to LLPs and Partnerships. Currently some larger accounting and law firms report voluntarily but this is not widespread in financial services. The exclusion of partnerships is sometimes explained on the basis that LLPs/partnerships have complex remuneration structures. SITC does not consider that this is an insurmountable issue.
  • More granularity to expose issues of equal pay where men and women are not paid equally for equal work. Firms will claim that the pay gap in their organisation is not driven by unequal pay, but in practice there is no measure of this. SITC notes that in the EU, the introduction of the EU Pay Transparency Directive will require firms to report in more granular detail, for example reporting pay gaps between men and women undertaking equal work. There will also be a requirement to undertake joint pay assessments with employee representatives where there are material gaps which are not justified by objective criteria. SITC would support similar legislation adopted in the UK and a requirement to address these differences where they exist.

8 Impact of Industry Initiatives: Women in Finance Charter
8.1 The Women in Finance Charter (WIFC) which was launched in 2016 has not led to material change. The WIFC followed a review into the number of women in senior roles throughout the financial industry. It asks firms to ‘pledge for gender balance across financial services’. However in practice it lacks rigour and has no mechanism for enforcement or accountability. We highlight below some of the specific weaknesses and recommendations to improve rigour and ensure that the WIFC is meaningful.

8.2 His Majesty’s Treasury does not set guidelines to direct firms on how to identify senior women. This leaves firms to choose their own parameters, and ultimately to ‘window dress’, giving an inaccurate portrayal of the true hierarchy of their firm.

8.3 HMT allows firms to supply their own targets and their own timeframe for reaching those targets. This allows firms to set low percentage targets and distant timeframes for reaching those targets. This is not the spirit of the charter. It allows firms to sign-up to the WIFC and use the logo etc to ‘pink wash’.

8.4 WIFC states that firms must show how senior pay is linked to the firm’s targets, however this is at the firm’s discretion. The firm can decide how the pay is linked, and the proportion of pay and choose those managers in scope. If there is no financial incentive for senior managers to improve the number of women in senior roles, there is a risk that this transition will get overlooked in favour of more easy wins. The link to variable pay and these targets does not appear to be monitored or checked by HMT/FCA, nor does there appear to be any penalties for those firms that hide the percentage link. More broadly and as noted earlier, the 2022 McKinsey Report also highlighted that female leaders frequently bear a greater responsibility for DEI and and that this work often goes unnoticed. Providing a clear link between remuneration and concrete action in respect of DEI would be a positive step, although it will be important to ensure that this does not lead to firms falling back on box-ticking or participation in external programmes run by lobby groups to demonstrate “easy wins”.

8.5 WIFC requires firms that sign up to the charter to name a Senior Executive from the firm to be the Account Executive to be ‘responsible and accountable for diversity and inclusion’. It is currently unclear how this Account Executive champions sex diversity through the firm, the strategy s/he might adopt, whether s/he is rewarded for any positive changes which bring the firm closer to their target, or indeed any penalties for the Account Executive or other members of senior leadership if the firm does not meet its target.

​8.6 S
ITC has the following recommendations to address these issues:

  • HMT should provide firms with a framework with which to identify senior women. This should be scaled, determining the decision-making responsibility, the number of direct reports, budget oversight etc depending on the size of the firm/number of employees.
  • The WIFC should stipulate a 5-year target and a percentage for firms depending on the information provided in recommendation.
  • HMT/FCA should examine the responses from firms more closely. WIFC could ask firms to stipulate the percentage of discretionary pay that is tied into diversity, and ask firms to justify the percentage chosen if it is below a certain level eg 15%. Firms should also be asked to identify and name those managers in scope. There should be financial penalties for firms who cannot demonstrate that variable pay is linked to diversity targets.
  • Firms should also ensure that at all levels, good people management and substantive contribution to effecting positive change in respect of DEI is rewarded.
  • HMT/FCA should hold meetings with the Account Executive at least every two years to understand strategies in place to meet the firm’s targets. They should also interview D&I managers separately and discuss any challenges the firm is facing in terms of meeting targets.

9. Conclusion
​It is clear that initiatives to increase diversity and representation of women in the sector have not always yielded the desired outcomes. SEEN in the City would like to see both regulators and regulated firms to implement and track our recommendations, with a focus also on monitoring the outcomes of their implementation. The Financial Services sector must be a force for good in contributing to an equitable and fair society. To achieve this there must be effective initiatives to tackle sex discrimination and ensuring there is genuine equality of opportunity for all within the sector.