City Lights and Gender Rights: A practical guide to tackling Sexism in the City
In March this year, Parliament's review of the status of sexism in the city revealed slow progress in addressing gender-based discrimination in the financial services sector.
The overwhelming takeaway is that despite some progress on representation, discrimination and broader barriers facing women persist in the industry and more could be done to attract, develop, and retain women.
In this latest blog we continue to explore the findings and recommendations of the Inquiry, providing practical steps firms can take to ensure better outcomes for women in their organisations and across the industry.
Barriers Facing Women:
Despite there being some progress, the Inquiry “identified several barriers that impede or prevent women from progressing within the financial services sector or encourage them to leave it”. These include childcare responsibilities, lack of flexible working arrangements, and generally entrenched gender stereotypes, which thwart progression and retention of women in the sector.
The Inquiry found strong evidence of continued negative impacts on women as a result of taking maternity leave, with some of the feedback received in the Inquiry’s roundtables on experiences of women in the industry including stark views from participants such as “…maternity leave could have a worse effect on a woman’s career than an allegation of sexual misconduct would have on a man’s”, and that where men were perceived as more trustworthy after having children, women were seen as a burden to a firm. Whilst there had been some improvements in parental or paternity leave, availability and uptake of these policies by men was not widespread across industry.
High and rising childcare costs in addition to caring responsibilities were also noted as a significant obstacle when returning to work. With men traditionally being the higher earners, women are more likely to either leave their roles or take up part-time work to reduce childcare costs. This can further impact woman’s progression and retention in the industry as flexible and hybrid roles, particularly at more senior levels, are less prevalent.
In order to shift the dial on the ‘maternity tax’, the Treasury Committee recommended that Government and regulators should encourage all firms to:
Consider equalising their offer of parental leave for men and women (and to actively encourage more men to take it up).
Be more transparent about their maternity and parental leave policies, including when advertising roles, by publishing them on their company websites.
Undertake equality impact assessments on their flexible working policies and the interaction with diversity and inclusion within their firm.
Advertise as many roles as possible to be available on flexible and part-time bases, as a way to attract and retain as wide a talent pool as possible, especially women.
Adoption of these recommendations should help move the dial on the negative perceptions of women having a family and encourage and support more equal sharing of parental leave and caring responsibilities by normalising more men taking paternity leave.
Beyond motherhood, the Inquiry also focussed on the effect of menopause and perimenopause on women in the workplace, with 1 in 10 women in the industry going through menopause and a quarter of these women expected to leave industry as a consequence. Whilst there was evidence of firms taking particular initiatives to support employees going through the menopause, more broadly it has been seen as a taboo topic and women may decide to leave their roles due to lack of support or understanding of the impact of menopause on women.
In order to ensure senior women are not leaving the industry unnecessarily, the Treasury Committee recommended that:
“Firms should recognise the impact of menopause and to establish policies and support for those who are affected to ensure that their experience and talents are not prematurely lost from the industry.”
To support women going through perimenopause and menopause, education and awareness programs should be implemented to reduce stigma and improve understanding of what women experience. Flexible work arrangements, including remote working options and flexible hours, should be offered to accommodate the varying needs of affected women. Manager training programs should be provided to help recognise and support employees experiencing symptoms, fostering open communication and offering necessary flexibility.
Pay Gap:
The gender pay gap in financial services (23.7%) is the widest average pay gap of any sector, compared to an average of 11.7% across all other industries. Lack of pay transparency was highlighted as a key factor exacerbating pay inequality. This is further exacerbated by women being less likely to negotiate salaries at the recruitment stage or ask for pay rises or bonuses than their male counterparts.
The Inquiry also found that gender pay gap reporting has not incentivised firms to act on and reduce gaps. As such, the Treasury Committee made a number of recommendations to the Government to strengthen pay gap reporting regulations, including:
A mandatory requirement for firms with a pay or bonus gap above a certain threshold to publish a narrative explaining the drivers of the gap(s) and an action plan for how they will reduce them.
Reducing the employer size threshold for pay gap reporting from 250 employees to 50 employees, at least for firms in financial services given the extent of the problem in this sector.
Amending the pay gap reporting guidance so that partners’ remuneration is included, and that the granularity of pay gap reporting be increased to provide more clarity around where pay gaps exist within firms and incentivise more targeted action to reduce them.
Introduce legislation to mandate the inclusion of salary band information on job advertisements, and to ban prospective employers from asking for salary history as part of the job application process.
In order to proactively tackle gender disparities in pay practices, firms should conduct regular pay audits to identify and address gender pay gaps within organisations and identify the reasons for such gaps. This includes examining pay disparities across different job roles, levels and demographics. Firms should also act to improve transparency in pay practices. This should be done by clearly communicating pay structures, criteria for advancement and opportunities for negotiation. Such transparency would help mitigate gender biases in compensation decisions.
Finally, firms should take proactive steps to promote diversity and representation for women in leadership positions. This includes implementing inclusive recruitment and promotion practices and providing leadership development opportunities for women.
Sexual Harassment:
The Inquiry found evidence of the continued prevalence of sexual harassment against women in the financial sector. Evidence received by the Inquiry from the advocacy group ‘Can’t Buy My Silence’ found that 45% of women working in the financial services industry had encountered sexual harassment in the workplace. This underscores the need to create safer work environments for women.
Further evidence underlined the “inadequate” internal whistleblowing procedures of firms and stated that HR teams prioritised the reputation of a business over the wellbeing of its employees. In cases where reports were made, the Committee found evidence which stated that 70% of whistleblowers within financial services were "victimised, dismissed or felt resignation was the only option open to them". These have resulted in instances of underreporting due to fear of repercussions and inadequate employer responses, which further highlights the need for stronger legal frameworks to address misconduct or discrimination.
Another key criticism under the topic of sexual harassment was the misuse of non-disclosure agreements. This comes after evidence revealed NDAs were being used in sexual harassment and misconduct cases as a tool to cover up allegations of abuse and to silence victims.
The Committee concluded as part of the Inquiry that whistleblowing processes within financial services firms are often ineffective at tackling bad behaviour or protecting those who report harassment. As such, they made the following recommendations:
That Government seeks to strengthen whistleblowing legislation to provide greater protection and support to whistleblowers in sexual harassment cases.
That the FCA launches an awareness campaign to publicise the availability of its whistleblowing line and clarify the circumstances in which it can be used, including that nothing in a non-disclosure agreement can prevent an individual from reporting harassment to the FCA.
The introduction of legislation to ban the use of NDAs in harassment cases.
That the FCA collect data on the use of NDAs by regulated firms in cases of non-financial misconduct.
Firms should mandate a zero-tolerance culture for any forms of discrimination, misconduct and harassment. To prevent (and recognise) cases of misconduct, it is important to build a respectful and supportive work environment of all forms of diversity. It is also essential to establish a culture of trust in the firm’s systems to encourage reporting and provide confidence that action will be taken against perpetrators.
Firms should establish clear policies and procedures for victims and whistleblowers reporting and addressing incidents of misconduct. This should include providing a confidential support helpline / channel for reporting and to ensure victim / reporter confidentiality.
Conclusion:
The changes required need commitment from firm leadership to take action on the issues women are continuing to face. The upcoming Policy Statement on D&I and non-financial misconduct will mandate an increased focus on these issues, but firms can get ahead of both the incoming regulatory requirements by proactively working to improve the experience of women in their organisations.
We’ve summarised all our recommended actions for firms in this blog below. From DEI workshops and training delivery to raise awareness, to strategy development and action plans, we can help you enhance your approach to DEI. However, to truly tackle the issues faced by women in Financial Services we would also recommend considering whether your firm culture will support and sustain any tactical changes made. If you would like to stay ahead of the curve and make proactive choices to enhance company DEI, consider exploring our Culture and D&I Framework available here.
If you have any questions or would like to know more about how Avyse can support you to integrate any of the recommendations into your practice, please contact me – Eimear.helly@avyse.co.uk
