FCA finds little progress on UK financial services gender diversity

Research by the FCA (22-page / 1.4MB PDF) found a slightly higher share of women in approved roles at larger firms, at 23% compared to 17% at solo-regulated smaller ones. Approved roles at senior management level in both larger and smaller firms tended to be more gender diverse than customer-dealing roles.

One area in which the FCA found "relatively rapid" improvements in diversity was amongst female senior managers at a sample of 94 major financial institutions, where the typical share had grown by nine percentage points since 2005. However, this growth had come from a "low base" of 9%, bringing diversity within this group in line with the still low industry average, the FCA said.

Financial regulation expert Elizabeth Budd of Pinsent Masons, the law firm behind Out-Law, said: "The regulator has made clear that diversity is a core aspect of how it views culture within a firm and that it will look at how firms approach diversity – and not just gender diversity".

"This research is particularly interesting since it considers not only senior managers but also those lower down in the firm who are on the FS Register. So it helps to focus the mind on the question of where our female financial services leaders are going to come from in the future, if currently women only make up 17% of FCA approved individuals. Unless there is a significant increase in those who qualify to be on the FCA Register or, from 2020, the FCA Directory, this gender imbalance is unlikely to improve any time soon," she said.

Budd also pointed to statistics highlighted by the FCA showing that the share of senior managers was highest at investment management institutions and lowest at institutional brokerages, which also showed the lowest percentage increase in female senior managers between 2005 and 2019.

"This perhaps highlights the recent proposal from professional bodies AFME and the IA that trading hours for European exchanges should be reduced by up to 90 minutes - from 9am to 4pm rather than 8am to 4.30pm – which might encourage more women to join or stay with these types of firm when faced with the challenges of mixing working with family," she said.

Figures obtained by Pinsent Masons earlier this year showed a drop in the proportion of women applying for approval under the FCA's Senior Managers Regime year-on-year. Women made up 26% of applications in the year to March 2019, down from 27% the previous year. Although the number of women applying for approval increased by 57% in that period, from 118 in 2017-18 to 185 in 2018-19; the number of men applying increased by 64%.

In its report, the FCA's researchers said there was "an increasingly broad-based consensus" about the need to improve financial services gender diversity, driven by "concerns that male dominated firms are inherently more risk-taking and firms need to represent the society of consumers they serve".

However, the increased focus in the industry on "bold targets and high-profile initiatives"; including the Treasury-backed Women in Finance charter, had had little to no effect on the figures, the report said.

The new Directory of directors, senior managers and certification function staff at FCA-regulated firms would give regulators an "extended and comparable pool" from which to monitor industry diversity metrics in the coming years, the researchers said.

"This evidence base will be instrumental in guiding efforts to improve the gender diversity of the UK financial services industry," they said.