Gender gap increasing at senior level in financial services

Figures obtained by Pinsent Masons, the law firm behind Out-Law, show that women made up 26% of applications for approval under the FCA’s Senior Managers Regime (SMR) in the year to March 2019, down from 27% in the previous year.

Although the number of women applying for approval under the SMR increased 57% from 118 in 2017/18 to 185 in 2018/19, the number of men applying increased by 64% from 311 to 510 over the same period.

Financial services expert Elizabeth Budd of Pinsent Masons said the consensus within the financial services industry was that increasing gender diversity at senior level was important, but that this was still to be reflecting in hiring and promotions.

“For some firms in financial services, good intentions and improved hiring and mentoring policies have yet to deliver results,” Budd said.

“The problem of a long-term lack of senior women within the financial services sector is obviously never going to be solved in a single year. However, for the industry to actually take a step backwards over the past year is disappointing,” Budd said.

“Firms must be committed to making the cultural changes that allow for women to excel in financial services. Signing up to the Treasury’s Women in Finance Charter should be the first step, followed by implementing its key pledges,” Budd said.

The Women in Finance Charter was set up in 2016. Firms which sign it commit to having a senior executive responsible for diversity and inclusion, setting internal targets for senior-level gender diversity, publishing their progress against those targets, and making sure that senior executive pay is tied to progress against the targets.

Although progress had stalled at senior level, there had been progress in gender diversity at the mid level. Applications from women for FCA approval for controlled function roles, coverings a broad range of mid-level responsibilities at regulated firms, rose 3% from 3,485 in 2017/18 to 3,598 in 2018/19.

Controlled function role applications from men fell by 1%, from 16,178 to 15,961, over the same period.

“Female leaders in financial services are not going to appear fully-formed – they must be mentored, promoted and allowed to flourish from middle management levels. It’s heartening to see that this process has begun in the sector,” Budd said.

“Those firms that remove the structural barriers that prevent women reaching senior levels will find that their leadership will organically achieve a better gender balance over the next five to 10 years,” Budd said.