5 The Future
60. While there are doubtless problems for women
in the City, and much remains to be done, it would be wrong to
think that nothing was changing. As Charles Goodhart said:
The idea that trading floors are a complete macho
area where women do not tread is actually incorrect now. I was
impressed by the number of women, both on the trading floors and
at junior and middle management levels. I think the problem is
both the pay gap and also the number of women at the very senior
level.[117]
61. Banks themselves are taking action. Despite the
problems we considered at para 25, RBS had realised that they
must do more to improve female representation at senior level.[118]
Their submission to us described how they have created a Group
Head of Diversity to oversee diversity improvements, as well as
starting a mandatory diversity training programme across their
retail branch network. This is encouraging, but failed to explain
why the initiative was restricted to the retail branch network,
rather than encompassing all parts of the organisation.
62. Standard Chartered Bank too told us it was committed
to diversity. Currently, two women sit on the board of 13 directors—equivalent
to 15%, with 25% of senior management made up of women and 34%
of middle management, Standard Chartered said they welcomed further
qualified female board members. The bank has designed a number
of initiatives to support women's career progression, for example
"mentoring, development programmes and women's networks".[119]
63. In the covering letter to its evidence, Barclays
told us it was taking positive steps in terms of getting and keeping
talented women:
Each business across the Barclays Group has a
gender action plan setting out how it aims to attract women into
the organisation, develop internal talent and improve retention
rates. Progress is monitored by senior executives.[120]
The organisation currently has no female members
on its board. It does have women at the top of two of their major
businesses, and Barclays told us the company was "committed
through the robust gender action plans embedded throughout the
Group to ensuring that even more women make it to the top of our
organisation."[121]
64. The ICAEW described many of the actions which
accounting firms were taking:
Each of the 'Big Four' firms, and many others
including BDO, have flexible working schemes, regularly monitor
their gender pay gap and are running programmes to encourage more
women into senior positions.[122]
For example KPMG run an equal pay audit and Deloitte
run an internal audit on the gender pay gap.
65. However, as Professor Goodhart said:
[...] while the situation may improve as the
increased number of women in the middle management ranks become
more senior and move up to the senior management level. That said,
there has been a continued under-representation of women and the
degree to which they seem to be paid considerably less for doing
exactly the same kind of job.[123]
The continuation of entry level pay gaps, as discussed
in paragraph 32, is particularly depressing.
66. We acknowledge that some companies are taking
action to improve the diversity of their organisations. It is
important that these plans succeed. The United Kingdom has had
laws in place outlawing discrimination for over three decades.
Despite this, the evidence suggests that women in some city companies
can be at a disadvantage, and even companies which are attempting
to implement equal opportunity policies can design them poorly.
This is not just a problem for the individuals concerned; over
the long term, it may affect the governance, and consequently
the performance, of the companies themselves. We recognise that
action by companies will take time to have an effect, but we would
expect to see improvements in years rather than decades.
The role of the regulators
67. We have discussed some minor legal reforms, such
as changes to parental leave entitlement and mandatory equal pay
audits for companies found to break the law on sex discrimination.
However we did not receive evidence indicating that major legal
changes were required to improve the situation for women in the
City. In principle there is a strong legal framework in place
if people wish to use it. The key is to make existing law work.
THE EQUALITIES AND HUMAN RIGHTS
COMMISSION
68. The EHRC was set up in October 2007.[124]
Its aim is to secure and implement an effective legislative and
regulatory framework for equality and human rights.[125]
Its job is to protect, enforce and promote equality across the
seven "protected" grounds which are age, disability,
gender, race, religion and belief, sexual orientation and gender
reassignment.[126]
According to the Commission it has "extensive legal powers
and a dedicated directorate of expert lawyers who are specialists
in equality law" which allows it to "take legal action
on behalf of individuals, especially where there are strategic
opportunities to push the boundaries of the law. Where there are
chances to create legal precedents or to clarify and improve the
law, the Commission will seek to do so".[127]
However the Commission recognises that it cannot intervene in
every case with an equality dimension. When it does intervene,
the Commission usually resolves cases at an early stage. Only
20% of cases go through to the enforcement stage where the EHRC
uses its powers to launch a formal inquiry or conduct an assessment.[128]
69. The EHRC launched an inquiry into sex discrimination
in the Financial Services sector in March 2009.[129]
The most recent report in the inquiry includes a number of recommendations
to companies as well as actions for the Commission itself. The
recommendations are:
- Commitment and leadership to drive forward gender
equality as a business objective;
- Increased transparency to mitigate gender bias;
and
- Better support staff with caring responsibilities.[130]
The Commission will carry out targeted consultations
with companies to help them understand and identify gender bias.
They will also "develop proposals in partnership with relevant
industry stakeholders" to create equality performance reviews.[131]
70. The Minister for Equality believed that the EHRC
had enough powers to fulfil its role. She was open to considering
additional powers if people wanted to suggest them.[132]
We questioned Mr Phillips about whether a tougher approach was
needed, given the extent of gender inequality in this sector.
His view was that
We [the EHRC] are as stringent as is appropriate.
We consider ourselves to be a modern regulator, which is something
rather more than simply a compliance machine. Part of our job
as regulator is not simply to wave the law. The fundamental job
of a regulator is to change and moderate behaviour and we have
a range of tools available to us which include evidence, they
include research, they include persuasion, and sometimes they
include investigation and inquiry […][133]
71. Though the two regulators have different histories
and responsibilities, it is interesting to note the stark contrast
between the EHRC's approach and that of the Financial Services
Authority (FSA). In a recent speech Hector Sants, Chief Executive
of the FSA talked about being "proactive and not reactive",
and that "when firms do not adjust their behaviours they
can expect tough action from the FSA".[134]
72. We have concerns about the way in which the EHRC
fulfils its research function. Its Financial Services Inquiry
rests on surveys of individual firms. Its explanation of inquiry
methodology says:
The questionnaire results presented cannot be
generalised to the finance sector as a whole since the sample
was not selected to be representative of the sector. Instead,
the data elicited by the questionnaire provides important case-study
evidence about workforce profiles and pay setting mechanisms that
will assist with the development of practical solutions to gender
inequality both within the organisations concerned and across
the sector generally.
And
It is important to note that there were a number
of data limitations. First, while all companies returned questionnaires,
some of the data requested was incomplete (particularly on pay),
some of the data was inconsistent within a questionnaire, some
of the calculations within questionnaires were inaccurate and
some companies offered different interpretations of the data required
to be returned. Some but not all of this data could be cleaned.
[...][135]
There were several further qualifications, including
explanations of why the pay figures in the inquiry did not match
the national statistics. Given the burden such inquiries place
on businesses, we believe they should be extremely carefully designed
so that the information they extract is as useful as possible.
Similarly, we note that Phase 3 of the inquiry includes an on-line
survey; we know from our own experiences that such general engagement
can shed light on real problems, but care has to be taken in drawing
conclusions from a self selected sample.
73. We consider that the EHRC should be more rigorous
in its approach to research: good policy requires good data. We
also note that the recent EHRC report suggests that it will rely
on persuasion to ensure that financial companies comply with the
law. The EHRC should monitor the effectiveness of this approach.
There is a danger that responsible companies will be over burdened
by requests for information, while bad ones will go unchecked.
We also would like more information on how the EHRC will ensure
that the recommendations and actions in their recent report have
a real effect, and are not forgotten as soon as made. We are mindful
of its powers to conduct investigations. We recommend that EHRC
work more closely with the FSA and on the implementation of the
Walker Review to ensure that progress is made.
THE FSA
74. The statutory duty to promote gender equality
in financial institutions, including in relation to pay, resides
with the FSA, as the regulator of this sector.[136]
This is part of a wider Gender Equality Duty discussed earlier.
75. We asked for the FSA's views on the Duty and
for information on any actions they would undertake to uphold
it. Lord Turner said the FSA were aware of their need to pay "due
regard" to promote equality and eliminate discrimination.[137]
Though Lord Turner stressed that gender equality was not the primary
focus of the FSA's activities, Hector Sants told us that the FSA
are engaging with the EHRC about their remit on gender equality.[138]
76. In a letter, Lord Turner cited their Remuneration
Code as an example of how the FSA are given consideration to the
Duty in their work.
This [the Remuneration Code] included guidance
that firms would need to take into account their statutory duties
in relation to equal pay and non-discrimination as part of considering
the risks arising from remuneration policies.[139]
The FSA will receive feedback statements from firms
about how they are complying with the Remuneration Code in February
2010. The financial services regulator have appointed Sally Dewar,
Managing Director of the Risk Business Unit, to lead on work considering
how issues of equality can be built into their supervisory model.[140]
77. The FSA recognises its role in paying "due
regard" to promoting gender equality and eliminating discrimination.
It is continuing to liaise with the EHRC and we recommend that
this liaison is strengthened. We believe this Committee, or its
successor, should be informed about the actions taken or planned
as a result of these discussions. We recommend the EHRC
monitors the equality plans and progress of City firms, in consultation
with the FSA, where appropriate.
Conclusion
78. Transparency and public scrutiny are important
ways to ensure that discrimination does not persist; we trust
that our successor committee will return to this issue to monitor
the progress made. In places in this Report we have suggested
that our successor committee return to this work; we believe that
some progress will be made through sustained scrutiny without
legislative fiat. We also believe there needs to be a dialogue
between companies and policy makers, so that the reasons for gender
imbalances are properly explored. We have focussed on the City
in this Report. However, the place of women in the economy is
not a matter for the Treasury Committee alone, and we hope that
other committees will join these efforts.
117 Q 2 Back
118
Ev 77 Back
119
Ev 87 Back
120
Written evidence submitted by Barclays [not printed] Back
121
Ev 71 Back
122
Ev 84-85 Back
123
Q 3 Back
124
Equality and Human Rights Commission: Who we are, www.equalityhumanrights.com Back
125
Equality and Human Rights Commission: Legislative framework, www.equalityhumanrights.com Back
126
Equality and Human Rights Commission: Our job, www.equalityhumanrights.com Back
127
Equality and Human Rights Commission: What we do, www.equalityhumanrights.com Back
128
Equality and Human Rights Commission: Enforcement, www.equalityhumanrights.com Back
129
"Notice of an inquiry under section 16 of the Equality Act
2006", Equality and Human Rights Commission Official Notice,
31 March 2009 Back
130
Financial Services Inquiry pp 15-17 Back
131
Ibid., p 18 Back
132
Q 235 Back
133
Q 150 Back
134
"Intensive supervision: Delivering the best outcomes",
Speech by Hector Sants, Financial Services Authority, 9 November
2009 Back
135
Financial Services Inquiry, Appendix 2 Back
136
Q 230 Back
137
Ev 88 Back
138
Oral Evidence taken before the Treasury Committee on 25 November
2009, HC(2009-10) 35, Q64-65 Back
139
Ev 88 Back
140
Ibid Back
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