The governor of the Bank of England has criticised the lack of women in senior jobs in the financial services industry and said it dents business performance in the UK.
Speaking at an event for the Treasury’s review of women in financial services, Mark Carney said the sector lags behind others.
“For too long, results have fallen short of good intentions. And for too long the financial sector has suffered the economic consequences of this inequality while society has borne the broader costs.”
Research by McKinsey, a consultancy firm, shows that companies with a bigger proportion of women in senior roles perform better. But the Treasury review, which was led by Jayne-Anne Gadhia, the chief executive of Virgin Money, found that in a sector of more than 2m people, women occupy only 14 per cent of top jobs.
The review proposes that senior managers’ pay packets should be somehow linked to the number of female executives.
On average, women are paid 40 per cent less than men in the financial services sector, compared with 20 per cent in other sectors, the report said. Insurance companies are the worst within financial services.
Ms Gadhia said: “For every pound that a man earns in UK financial services, on average a woman only earns 60p . . . I think that’s quite a hard-hitting figure.”
However, the report stopped short of setting targets for the number of women, or specific links to pay. Companies should instead set their own targets and appoint a senior executive to monitor progress, it said.
“Our view has been that we should not be interfering in the way financial services companies run their businesses, but we should be encouraging them to think about how they run them more fairly in terms of gender balance and ultimately diversity balance,” Ms Gadhia said.
The notion that women do not move up to senior roles due to childcare issues is a “misconception”, Ms Gadhia added.
The main reasons for the limited progression include the lack of a supportive line manager and the culture of working at a desk from “dawn until dusk”, particularly in the case of investment banks.
The Treasury has launched a voluntary charter in line with the report, which the UK’s biggest banks have already signed up to, making a commitment to set targets for the number of women in senior roles. A list of the companies that have signed up will be published after three months, Ms Gadhia said.
There have been improvements in gender equality over the past few years. The proportion of female board directors at FTSE 100 companies has risen from 12 per cent in 2007 to 26 per cent in October last year, according to the British Bankers’ Association.
However, the BBA has stressed that more needs to be done to raise the number of female senior managers, and tackle the “ pinstripes and braces” reputation of the industry.
Mr Carney said the Bank of England has introduced diversity targets that, for the first time, will be reviewed by court, the bank’s governing body. He said the central bank is aiming for 35 per cent of senior management to be female by 2020, and an equal split of men and women throughout the organisation by that date.
Jon Terry, a partner at PwC, a consultancy, said: “The additional reporting recommendations will put considerable pressure on financial services firms to demonstrate meaningful change in gender diversity.”
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