Women in finance Contents

5Government responses

HM Treasury’s Women in Finance Charter


79.In 2015, the then Economic Secretary to the Treasury, Harriett Baldwin, asked Jayne-Anne Gadhia, Chief Executive Officer of Virgin Money, to lead a review into the representation of women in senior management in the financial services industry. The review made the following recommendations to industry to improve gender diversity in the financial services sector:

80.The Government “fully supported Jayne-Anne’s work and the recommendations outlined in her review.”66 In response, the Government launched the Women in Finance Charter. The Charter asks firms to commit to implementing the four key industry actions recommended in the review. The Charter was launched in March 2016. Financial firms signing up to the Charter commit to promoting gender diversity by:

As of March 2018, 205 firms across the financial services sector have signed the Charter, covering over 650,000 UK financial services employees.

Impact of the Charter

81.The Government commissioned New Financial, an independent think tank, to conduct a review of the progress made by the first cohort of Charter signatories. The key conclusions of the review were:

82.When asked about the level of sign-up, Jayne-Anne Gadhia stated that “in some ways, it was better than expected. […] The majority [of the big investment banks] have signed, and that is excellent.”69 She noted that the support of the Government and regulators has been valuable:

The Treasury and both Chancellors—George Osborne and Philip Hammond—have taken a personal interest in this. That has been very powerful. The support of Mark Carney, the Governor of the Bank of England, was not unnoticed when the Charter was launched […] The PRA and the FCA have signed up to the Charter. Having your main regulators absolutely 100 per cent behind it has meant that financial services companies have not been able to ignore it.70

83.The Chair of the Committee wrote in February 2018 to 43 companies that seemed to be conspicuously absent from the Charter signatories. Some were in the process of agreeing and appeared in the March 2018 list of new signatories.

84.When asked for his views on the future of the Charter, John Glen, Economic Secretary to the Treasury, stated that he would “hope to see that the number [of signatories] increase significantly [such that it] becomes a normal practice to have this agenda at the centre of board discussions.”71 John Glen also stated that:

I would hope that we could move forward in future seasons to broaden an understanding of some of the challenges further down organisations. We have done some work to say what the target is in terms of people in senior positions, but we need to go further and address what I said in my opening remarks about the culture. We can call out culture that is not right. We can put in policies that tackle the pay gap, that deal with the progression, that deal with some of the real challenges that exist, but we have to set those out as part of an evolving range of issues that the charter is ready to tackle.72

85.John Glen also explained some of the concerns of companies who had not signed up to the Charter, saying that “they are concerned about the situation they are in at the moment and whether they have the means to move forward. They are perhaps concerned about what it takes to put in the policies, get the training right, and how onerous this will be”.73

He said Treasury is encouraging these firms to sign by “showing them that they are in good company, both in terms of the challenges that exist and the opportunity to make progress, and how positive that would be for their reputation and […] for the performance of their enterprise.”74

86.When asked for his views on whether the Charter can drive changes in gender diversity in finance, Jon Terry, a Partner at PricewaterhouseCoopers, noted that “organisations had put in place actions they would not have taken without signing up to the Women in Finance Charter.”75 However, Jon Terry also said:

Will the Women in Finance Charter on its own solve the issues? Absolutely not. […] The Women in Finance Charter is, at the moment, focused on the senior levels and we have been talking a lot about how this really needs to be addressed through the pipeline and middle management levels. […] Focus on that could help, but that area is not currently covered by the Women in Finance Charter and is core to some of the solutions that need to be found.76

87.The Committee also received evidence from Dame Helena Morrissey, Head of Personal Investing at Legal & General Investment Management, stating that further work needs to be done to further gender diversity:

The charter has focused the minds of those who have signed up and that is very much welcomed and likely to lead to a positive impact. Signing up in itself is obviously not a substitute for action […] Companies sometimes take a ‘polite’ position when it comes to adhering to public policy–further work is (inevitably) needed before they act as if they believe in the ideas. There should be no misunderstanding that companies are ‘living and breathing’ the charter merely because they have signed up.77

Gender pay gap reporting


88.From 6 April 2017, employers in Great Britain with more than 250 staff are required by law to publish the following four types of figures annually on their own website and on a Government website:

The deadline for employers to publish these figures was 4 April 2018, and 30 March 2018 for public sector employers. If employers failed to publish by the deadline, they could face sanctions from the Equalities and Human Rights Commission (EHRC) which is responsible for enforcing the reporting requirements. In a letter to the Committee, Rebecca Hilsenrath, Chief Executive Officer of the EHRC, outlined the enforcement processes:

Our enforcement process commenced on 9 April 2018, when we wrote to all employers […] believe[d] to be in scope of the regulations but who had not reported their pay gap. Employers were given 28 days in which to comply with the regulations or face further action […] The next stage for private sector employers will be an investigation under section 20 of the Equality Act 2006, in which we establish whether an employer has committed an unlawful act. If we conclude that it has done so, we will issue an unlawful act notice. If they do not comply with the notice, we will apply for a court order requiring them to do so. Breach of this court order is punishable upon conviction with a level 5 (unlimited) fine.78

The EHRC added that they would publish details of all employers that reach investigation stage and a final report when the investigation is concluded.79

89.When asked about how the gender pay gap reporting legislation would be enforced, Victoria Atkins, Minister for Women, outlined the formal processes and also noted that:

We actually think the greatest penalty will be the scrutiny of journalists looking through the list, working out who has not reported who they think probably should have done, and the public stigma once a company has not complied with the law.80

90.When asked about what can be done to ensure firms are prioritising gender diversity and delivering results through their initiatives, Jayne-Anne Gadhia stated that “what gets measured gets done, and what gets read about and reported in the media gets attention from the executive committee.”81

Key trends from the financial services sector and the impact of reporting

91.For the financial services sector, the gender pay gap reporting submissions reveal the following82:



92.For firms in book publishing,83 the average (mean) pay gap per hour is 17 per cent and the average (median) pay gap per hour is 11 per cent. The firms in book publishing also reported that 53 per cent of those in the top earnings quartile are men and 47 per cent are women.

93.For firms in engineering,84 the average (mean) gender pay gap per hour and the average (median) gender pay gap per hour are both 24 per cent. The firms in engineering reported that 89 per cent of those in the top earnings quartile are men and 11 per cent are women.

94.When asked what the key drivers of the gender pay gap for the financial services sector are, Jon Terry explained that:

In many organisations, the biggest issue is one of demographics: the lack of women in the highest paid roles, which are typically the senior roles. For a number of those organisations that have currently disclosed, they have split out the gender pay gap for that. The second set of issues is a disproportionate number of women in the lower-paid jobs, which are typically the more junior roles […] Those are, by far, the two biggest causes.85

Jon Terry also stated that:

The critical thing is for organisations to explain the numbers, to be clear what they are without any spin, to say what they think about those numbers, to say what the causes of those numbers are … and then what they are going to do about it.86

95.Susan Allen, Head of Retail Distribution at Santander UK, has noted that the transparency of gender pay gap reporting has opened the discussion further:

Because it is a debate that has been happening in executive committees but suddenly it is very transparent to all our teams. […] It is a really good thing to be having conversations about why we are not seeing more balance at senior levels and what the barriers are. The more we explore and understand that, the more successful we will be at creating an environment for more people to come through at senior levels.87

Limitations of gender pay gap reporting

96.When addressing what could be done differently in gender pay gap reporting, Anne Richards, Chief Executive Officer of M&G Investments, argued that greater granularity in gender pay gap reporting could be useful:

More granularity in explaining the data is quite important […] We must not then end up with a situation where the apparent data is making something look like it is a deterioration, when in fact it is an improvement. Perhaps a better adjustment for part-time or flexible working, certainly with my own data, would make a meaningful difference. There is something about how you present to give a more insightful view of what the data is actually saying.88

97.The Government’s guidance on gender pay gap reporting permits the omission of partners’ remuneration from gender pay gap disclosures as partners take a share of the organisation’s profits, which is not directly comparable with employees’ pay.89

When asked for his views on firms trying to not disclose total figures because they are a partnership rather than a limited company, John Glen stated:

It is an […] outrageous attempt to thwart the spirit and letter of what is required, which is actually to be transparent about a very serious issue that society is very concerned about. It is sending totally the wrong signal to the next generation who are contemplating apprenticeships and careers.90

The Committee also received evidence from Dame Inga Beale, Chief Executive Officer of Lloyd’s of London, noting that the current gender pay gap reporting legislation “allows company subsidiaries that have fewer than 250 employees, and partners who are remunerated differently to employees, to be exempt from reporting.”91 Dame Inga argued that “in the spirit of transparency […] the Government and Equalities Office [should] revisit gender pay gap reporting conditions.”92

98.TSB Bank argued that in addition to reporting, firms should adopt principles “which […] will go a long way to building a sustainable gender balanced workplace that lasts for the long term.”93 TSB Bank argued that:

Businesses shouldn’t just report on their gender pay gap figures, they need to identify the root cause behind any gap. […] Businesses must act to address the causes of their pay gap. […] Businesses must be held to account on the progress they are making. Businesses should report annually on those signature actions and include within their report, over time, a rolling five year trend which shows the progress they are making.94

Education and career support

99.The Committee has received evidence arguing that more can be done to encourage gender diversity in finance by influencing girls’ education and careers. Deloitte stated that:

Government, businesses and regulators can […] all play a more active role in building links with the education system to ensure that, from an early age, women have knowledge and insight into the sector, are equipped with the skills they need to succeed and have visible role models in women who have built successful careers in financial and professional services.95

Dame Helena Morrissey shared this view, stating in her written evidence that:

One additional area meriting more government attention concerns career advice for girls. There is considerable focus on STEM (Science, Technology, Engineering and Mathematics) subjects, but less on the impact of career choice on later work-life balance. There is scope for the government to showcase successful women in a wide range of careers that may not be conventional choices for girls. A campaign along the lines of ‘This Girl Can’ which was so successful in encouraging more women and girls to take up sport could really impact the numbers of talented girls considering a career in the finance industry. Improved risk profiles, cultures and public trust in financial services companies are strong reasons to consider such a campaign.96

100.Genderbuzz, an organisation which promotes female empowerment, submitted evidence stating that young women are not as aware of the career paths that lead into the profit-making functions of financial services companies:

Young women tend to […] populate the support functions such as legal, compliance, operations […] rather than profit making functions such as trading, sales, investment banking […] These earlier differences in intake destinations set the scene for the opening up of the gender pay gap in banking and finance.97

Shared parental leave

101.Shared parental leave enables eligible mothers, fathers, partners and adopters to choose how to share time off work after their child is born or placed with their family. The policy was introduced in 2015.

102.According to the Chartered Institute of Personnel and Development (CIPD), the take-up of shared parental leave has been low, stating that “on average, five per cent of new dads [and] eight percent of new mothers who were eligible for shared parental leave had taken up their right.”98

103.The Fawcett Society argued that fathers do not feel that they can use shared parental leave, stating that “there are large numbers of working dads who currently do not feel provision is made for them to take time off.”99

104.Amanda Blanc, Group Chief Executive Officer of AXA UK, also informed the Committee about the low uptake of shared parental leave in her firm:

[AXA UK has] had a very, very low uptake of shared parental leave, even though our policy is quite generous […] That suggests to me that people still believe that there is an issue in terms of being away from the workplace for more than […] a couple of weeks. […] There is this absence issue where people think “I just cannot be away for that period of time.” […] That explains the lack of take-up of shared parental leave.100

105.When asked about the low uptake of shared parental leave, Victoria Atkins stated that:

We are very conscious that although we here in the Westminster village are well aware of shared parental leave, that message has not necessarily reached everybody across the country. It has been in place since 2015. We are conscious that first employees, but also employers, need to understand it more. In February this year the Home Office and BEIS launched a £1.5 million campaign called “Share the Joy” to let people know this is available. We are hoping that campaign will start to spread better knowledge of it.101

106.The Committee received evidence on Aviva’s new parental leave policy:

In November 2017 Aviva launched a new group-wide policy to offer equal paid leave to new parents, thus creating a level playing field for men and women who want to take time out to spend with the new addition to their family. […] Parents employed by Aviva will now be eligible to the same amount of paid and unpaid time off […] In the UK this means that Aviva is now offering up to one year of leave, of which 26 weeks’ is at full basic pay for each parent employed by the company, within the first 12 months of a child’s arrival.102

The role of the Government and regulators

107.The Committee considered whether the Government and the regulators should be role models for best practice in this area.

108.When asked about how more firms can be encouraged to sign the Women in Finance Charter, Jayne-Anne Gadhia said that “it is very important that regulators are very supportive of the agenda.”103

109.In addition to supporting Government initiatives, Jon Terry argued that the regulator plays a significant role in changing the culture of financial firms and “the FCA’s focus on conduct and culture over the last few years […] [and] the introduction of the Senior Managers and Certification Regime [have] been important step[s].”104

110.Jon Terry also noted the potential use of regulation to further the gender diversity agenda:

Currently there is a regulatory requirement for those organisations that are PRA regulated to disclose their diversity policy. That is very light touch and the amount of supervision of that is light touch. I would […] suggest […] look[ing] at the regulatory requirements across the whole of financial services on not just disclosing diversity policies but the action plans that underpin those policies.105

The Government and regulators’ gender pay gap

111.The Treasury has reported an overall mean gender pay gap of 7.1 per cent and a median gender pay gap of 13.7 per cent in favour of men, which is lower than the averages of the financial services sector.106 The Treasury explained that “the pay gaps do not indicate that men and women are being paid differently for equal work, [rather] there is a higher proportion of women in junior grades and lower representation at senior levels, which affects the average and median pay for each gender.”107

112.In a letter to the Committee, Sir Tom Scholar, the Permanent Secretary to the Treasury, noted the number of times the Treasury’s gender pay gap has been discussed at senior committee meetings:

Since May 2017, the Treasury’s gender pay gap has been discussed twice by the Treasury Board (sub-Committee) and six times by the Executive Management Board.108

The Treasury Board (sub-Committee) met five times in the 2017–18 financial year. The Executive Management Board formally meets on a weekly basis and there were 42 such meetings in the 2017–18 financial year.

113.The Bank of England has reported a mean gender pay gap of 21 per cent and a median gender pay gap of 24.2 per cent in favour of men.109 The Bank noted that:

While we are confident that men and women are paid equally for doing equivalent jobs across the Bank, the main reason for our organisation-wide gender pay gap is an imbalance of male and female colleagues across the organisation […] There are fewer women in senior roles than men, as well as a higher proportion of women relative to men in lower scales.110

In the Committee’s session with the Governor of the Bank of England, Mark Carney, on 17 October 2017, elaborated on the Bank of England’s efforts to improve diversity:

We are doing extensive things, including external recruiting, unconscious bias training, blind panels, promotion, moving away from recruiting just economists, recruiting from 40 universities as opposed to 10, as we used to do, and only taking 50 per cent of intake as economists, as opposed to broader disciplines where women are much more prevalent. If you start from a position of an almost exclusively white male institution and you want to move, you need a deliberate strategy of movement. We will end up being middle of the pack for the financial services industry. We will be high relative to the broader public sector, certainly higher than the health service and the education sector.111

At present only one of the nine members of the Monetary Policy Committee is a woman, only one of the 12 members of the Prudential Regulation Committee is a woman and only one of the 12 members of the Financial Policy Committee is a woman.

114.The Financial Conduct Authority has reported a mean gender pay gap of 19.3 per cent and a median gender pay gap of 20.9 per cent, in favour of men, explaining that:

The over-riding factors driving the gender pay gap at the FCA are under-representation of women in more senior technical and managerial roles, and over-representation of women in administrative roles.112

115.The Treasury’s Women in Finance Charter has been effective in raising awareness on gender diversity and initiating change in the financial services sector. The Committee encourages all firms within the sector to sign the Charter and supports the Treasury’s efforts in engaging with the firms who have not signed. The Committee will also continue its discussions with these firms.

116.The Committee recognises that there is a considerable way to go, and supports further industry and Government initiatives to improve gender balance. The Committee acknowledges the Charter is focused on the representation of women amongst senior positions and thus encourages the Government to also consider initiatives to help firms improve gender balance further at all levels of seniority through the finance sector.

117.The Committee recognises the importance of transparency and disclosure in driving the gender diversity agenda. The gender pay gap figures reported for the financial services sector confirm that a large gap exists between men and women working in finance, particularly regarding bonuses. The figures also confirm that there are significantly more men than women in higher earning, and more senior, positions. Firms and the Government now need to analyse the data to identify problems and devise strategies to overcome the gender pay gap and support the progression of women. For transparency, the Committee strongly encourages firms to publish their strategies and report on their progress. Going forward, the Committee will monitor firms’ progress in meeting their targets and review the effectiveness of their strategies.

118.The Committee has noted that over 570 organisations do not have a Standard Industrial Classification (SIC) code alongside their gender pay gap reporting data. In addition, over 300 public sector bodies have simply been listed as public sector, rather than identifying which specific industry or sector they operate in. The companies and public sector bodies themselves were not responsible for submitting this information, it is partly drawn from Companies House records, and partly completed by Government Equalities Office staff. The lack of accurate SIC code reporting renders sectoral analysis of the gender pay gap reporting data difficult, as the codes are crucial for identifying the sectors that organisations operate within. The Committee recommends that the Government reviews the gender pay gap database to identify and correct omissions and errors in order to provide as much sectoral information as possible.

119.The Committee recommends that the Government amends its guidance on gender pay gap reporting surrounding the disclosure of partners’ remuneration to prevent firms from circumventing the spirit of the legislation. For many large professional services firms that are partnerships, partners have a similar status to senior executives and should therefore be included in gender pay gap calculations. Omitting partners’ remuneration could reduce the gender pay gap for these firms, rendering the reported figures disingenuous.

120.The Committee agrees with John Glen that it is “outrageous” that firms are circumventing the spirit of the gender pay gap legislation. The Committee would like to see the Chancellor of the Exchequer become equally vociferous.

121.The Committee also encourages the Government to reconsider whether it is appropriate that subsidiaries of large companies with less than 250 employees are exempt from gender pay gap reporting. This exemption could impact the trends emerging from gender pay gap reporting data and the conclusions drawn.

122.The Government should consider expanding gender pay gap reporting to encompass reporting by job role and by corporate function, to offer greater transparency.

123.The Committee heard that encouraging girls to study relevant subjects at school and to consider the work of the financial services industry earlier in life could be an important step in encouraging more young women to enter the financial services sector. The Government and industry should work with schools, organisations providing further education, and careers organisations such as the Careers and Enterprise Company to facilitate this.

124.Ensuring young women are aware of the variety of career paths within the financial services sector, and where those paths could take them, could encourage them to move away from “support” functions within financial services. In the longer term, this could improve the gender diversity of the sector and reduce the gender pay gap. The Committee encourages the Government and industry to consider how opportunities in financial services can be introduced to young women in their education and career considerations.

125.Shared parental leave was designed to give parents greater flexibility in managing childcare and employment. However, since its introduction, the uptake has been low. The Committee supports the Government’s initiatives to increase awareness of the shared parental leave policy. Following its awareness campaign, the Government should continue to monitor the uptake of shared parental leave and seek to understand the reasons behind the low take up and its wider impact on parents’ career progression, particularly fathers.

126.The gender pay gap reporting by the regulators show that they exhibit similar trends as the rest of the financial services sector. The regulators should continue to implement initiatives to improve their own representation of women at senior positions and reduce their gender pay gap. This will enable them to act as an effective role model to the rest of the industry.

127.The Committee also believes that the Treasury and the regulators should ensure that gender diversity and their gender pay gap are priorities. The Treasury’s Executive Management Board meets on a weekly basis, yet only discussed its gender pay gap six times since May 2017. The Committee recommends that the Treasury and regulators discuss their organisations’ gender diversity and gender pay gap as frequently as they would other priorities. The Minister and Permanent Secretary must make it a personal priority to ensure diverse short lists for all appointments.

128.Going forward, the Committee will continue to challenge the Treasury in its appointment of senior staff at the Bank of England, the Financial Conduct Authority and all other bodies within its remit to ensure a diverse pool of candidates is considered with each appointment. The Committee will also further the gender diversity agenda by obtaining, where possible, gender diverse witness panels.

66 HM Treasury, Women in Finance Charter (February 2018)

69 Q38

70 Q37

71 Q227

72 Q227

73 Q243

74 Q243

75 Q137

76 Q137

77 Dame Helena Morrissey (WFN0021)

78 Equalities and Human Rights Commission, Letter to the Committee, 18 April 2018

79 Equalities and Human Rights Commission, Letter to the Committee, 18 April 2018

80 Q223

81 Q41

82 The financial services firms captured in these figures were identified through their Standard Industrial Classification (SIC) codes, reported alongside their data in their gender pay gap reporting submissions. Organisations that did not complete their SIC codes were not captured in the data.

83 The firms in book publishing were identified through SIC codes for “book publishing”.

84 The firms in engineering were identified through SIC codes for “engineering design activities for industrial processes and production”, “engineering related scientific and technical consulting activities” and “other engineering activities.”

85 Q141

86 Q139

87 Q207

88 Q210

89 Government Equalities Office, Guidance on Gender Pay Gap Reporting

90 Q221

91 Dame Inga Beale (WFN0026)

92 Dame Inga Beale (WFN0026)

93 TSB Bank (WFN0016)

94 TSB Bank (WFN0016)

95 Deloitte (WFN0012)

96 Dame Helena Morrissey (WFN0021)

97 Genderbuzz (WFN0021)

98 Chartered Institute of Personnel and Development, Labour Market Outlook: Views from Employers (December 2016)

99 Fawcett Society, Parents, Work and Care: Striking the Balance, (March 2016)

100 Q159

101 Q262

102 Aviva Plc (WFN0010)

103 Q39

104 Q105

105 Q126

108 Treasury Letter

109 Bank of England, 2017 Gender pay gap report (November 2017)

110 Bank of England, 2017 Gender pay gap report (November 2017)

111 Oral evidence taken on 17 October 2017, HC (2017–19) 474, Q65 [Dr Mark Carney, Governor of the Bank of England]

112 Financial Conduct Authority, Our gender pay gap (October 2017)

Published: 13 June 2018