Women in the City - Treasury Contents

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.


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.


    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.


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.


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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