A dearth of women and ethnic minorities in financial services has made the scale of the City’s bad behaviour worse, the boss of the FCA has told Chris Newlands in Financial News
FCA CEO Andrew Bailey said that problems in the past ten to 20 years have been “exacerbated by a lack of diversity”.
He has set what Newlands describes as “aggressive diversity targets” for the UK’s financial regulatory body, and urged others to follow suit. “We need to lead by example,” he said. “As a public interest organisation we need to bear some resemblance to the population as a whole. If you don’t, you get unstated biases.”
Currently, women occupy 36% of senior leadership positions at the FCA. He says the target is to increase this to 45% by 2020, rising to 50% by 2025.
The percentage of people from ethnic minorities in senior leadership positions is also targeted to rise, from 2% now, to 8% by 2020, increasing to 13% by 2025.
Bailey says that ‘groupthink’ – the practice of thinking or making decisions as a group that result in unchallenged decision-making of a low quality – is a result of low levels of diversity.
In June 2017, Financial News
asked Barclays, Deutsche Bank, Credit Suisse, Morgan Stanley, HSBC, UBS, Goldman Sachs, Bank of America Merrill Lynch, JPMorgan and Citigroup to detail the ethnic mix of their staff.
The only organisation that provided UK figures is Barclays, which show that 30% of its workforce, including those in the retail business, is “multicultural”.
Financial News article
Ageism in the workplace is “common”, Joel Muckett writes in Economia
. Two-thirds of UK finance professionals describe workplace age discrimination in this way, according to research by UK jobs board CV-Library.
Half of the 1,400 respondents say they have been discriminated against for being too old, and 37% say they have been discriminated against for being too young.
"While ‘diversity’ is widely touted these days, that is not enough"
Hiring is affected too. Two-thirds of those who were deemed too young had been informed by potential employers that “they were concerned about how long they would stay in the job”.
A quarter of older workers “were told that there were concerns about their inability to learn new things quickly”.
Old lady no more
Changes are afoot on the diversity front though. The ‘old lady of Threadneedle Street’ may have to change her name, following proposals by the Prudential Regulatory Authority (PRA), according to a BBC report.
The PRA plans to remove gendered language from its documentation, modify the addressing of individuals in terms of 'his/her' and change terminology from 'grandfather/ing' – which the article describes as allowing “an old rule to be used while a new rule governs future cases” – to 'conversion'.
The article cites the PRA as saying “the changes to the Senior Managers and Certification Regime ‘form part of the PRA's commitment to encourage equality and diversity at regulated firms’”.
Two sides of the coin
In the US, a report into diversity trends in financial services from 2007 to 2015 by the Government Accountability Office tells two stories, writes Joe Davidson in The Washington Post
There was a 4% rise in “the representation of African Americans, Latinos, Asians and others in lower, middle and senior level management positions”. Asians had “the largest gains”, from 5.4% to 7.7%. However, the percentage of black managers decreased from 6.5% to 6.3%.
Gender parity was close in lower and middle level management positions, with 48% of these roles filled by women. For senior level roles, this was 29% over the eight-year period.
“While ‘diversity’ is widely touted these days, that is not enough,” Davidson observes. “The report points out that inclusion is key. That means power in top level, decision-making positions.”
The benefits of diversity – be they economic, social or otherwise – are well documented. Yet still financial services, although not the sole sector guilty of this, fail to take heed and lag behind. Those leading the way should be commended, but this requires sector-wide action.
The Washington Post article
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