A number of leading banks, including Lloyds Banking
Group, Barclays, HSBC and The Royal Bank of Scotland,
have pledged to tackle gender imbalance in the UK
financial services sector by signing up to a new voluntary
The Women in Finance Charter (Charter) was
launched by HM Treasury following recommendations
made by Jayne-Anne Gadhia, Chief Executive of Virgin
Money, who recently carried out a review into the
representation of women in the financial services sector
The aim of the Charter is to increase the
number of women in senior leadership positions. Firms
which sign up to the Charter commit to implementing
the recommendations set out in the Review.
The Review reveals that financial services firms employ
more women than men but only a few women progress
beyond middle management levels, leaving most of the
top jobs in the hands of men. At entry level 66 per cent
of recruits are female but this drops to 33 per cent at
middle management level and to 18 per cent at senior
management level. On average women make up
23 per cent of boards in the financial services sector but
their representation on executive committees amounts to
only 14 per cent, while 25 per cent of the companies
sampled had no women at all on their executive
committee and nearly 17 per cent had no women on their
Where women do sit on executive committees
they tend to be in corporate support functions such as
human resources, communications, legal and compliance,
marketing, treasury, audit, policy and public affairs rather
than business-facing (profit and loss) roles.
Whilst the sector has the highest pay in the UK it also
has the widest gender pay gap, which currently stands at
39.5 per cent.
The Review recognises that meaningful change in gender
equality is only likely to happen if businesses start to
measure it. What gets measured gets done.
To that end,
recognising that each business will have its own priorities
and requirements, the Review makes three overarching
1. Reporting – firms should set their own internal
targets, against which they should publicly report
2. Executive accountability – there should be an
executive responsible for improving gender diversity
at all levels of the organisation and in all business
3. Remuneration – executive bonuses should be
explicitly tied to achieving the internal targets which
firms have set. It would be up to individual
institutions to determine how they do this.
The government strongly believes that these
recommendations will be key to driving change. Each firm
signing up to the Charter will be expected to set out its
approach to each of these three recommendations and
report on progress against targets either in its Annual
Report and Accounts or in a prominent and signposted
place on its website.
Firms have been asked to sign up to the Charter on a
After three months HM Treasury
intends to publish a list of signatories. If large sections of
the industry do not engage with the recommendations
then government may need to examine whether a more
prescriptive approach is required.
Aside from the main recommendations, the Review also
identified other positive actions which could be taken to
improve inclusion in the workplace.
These key enablers
- investing in supportive people managers
- providing technology to support flexible working
- ensuring pay structures are transparent; and
- implementing good flexible working policies.
The big question is whether the Review and the Charter
will succeed in bringing about change. Signing the
Charter is entirely voluntary and the proposals do not
have the force of law. Cynics may argue that even if firms
do sign up to the Charter they may set themselves
unambitious targets in order to ensure that they are
achievable and do not have an adverse impact on board
bonuses. On the other hand many high profile diversity
groups and many senior women are against legally
binding quotas as it is felt that they misfire and do not
lead to a genuine acceptance of diversity in leadership.
International banks may be reluctant to sign up if this means
that they have to commit to introducing practices in this
jurisdiction which they do not want to implement elsewhere.
The fact that a number of leading banks have already
signed the Charter is however encouraging. Institutions
which have not yet signed up run the risk of being named
and shamed in the press and this could prove a powerful
incentive. Investors may also play a part in lobbying firms
to consider more women at board level. According to
the Daily Telegraph, big investors, such as Aviva and
L&G, have already been quietly lobbying on this front.
The Review is just one part of the government’s overall
commitment to tackling gender inequality in the
workplace. Recently the government committed to
addressing gender pay gap through requiring every
company with more than 250 employees to publish the
difference between the average pay of their male and
female employees. Sir Philip Hampton, the Chair of
GlaxoSmithKline, was also recently appointed to lead an
independent review on increasing representation of
women in the Executive level of FTSE 350 companies.
It seems that the tide is turning. It will be interesting to
see how many banks and financial services firms sign up
to the Charter over the next three months and what
positive steps they take to increase the number of
women in senior positions.