The Treasury Committee of the UK House of Commons  published a report on Sexism in the City on International Women’s Day, or 8 March 2024.

The Committee previously published a report in 2018 highlighting the underrepresentation of women in senior positions in financial services and the large difference in average pay between men and women in the sector. For example, the mean gender bonus gaps for 2022–23 were 54.4% for HSBC Bank and 67.5% for Barclays Bank.

“Five years on, we launched our current inquiry into Sexism in the City to find out how much had changed,” said the Committee. “Disappointingly, the answer appears to be ‘not much.’ Many of the barriers identified in 2018 remain stubbornly in place.”

The Committee continued that it is “shocking” to hear of the prevalence of sexual harassment and bullying, up to and including serious sexual assault and rape, and how poorly firms handle allegations of such behaviours. Dame Amanda Blanc, chief executive of Aviva and Women in Finance Charter Champion, told the Committee that its survey found that physical abuse was around 28% in financial services and verbal abuse was 43%.

“Those are 10% higher than in other industries,” added Blanc. “Clearly, there is an issue here.”

The legislators were particularly concerned to hear of the widespread misuse of non-disclosure agreements (NDAs) which are used to silence victims while allowing perpetrators to continue their careers and  their abuse.

“As in 2018, the overarching problem behind all these issues is that of impunity for perpetrators and culture, and the limited progress since 2018 can largely be ascribed to a lack of cultural change in the sector,” added the report.

The Committee acknowledged that responsibility for tackling these issues and driving cultural change sits with senior leadership and boards of firms who need to embed a zero-tolerance culture and ensure robust processes in place to investigate allegations of harassment and punish perpetrators.

However, investors also have a key role to play in holding firms to account for their performance on diversity and inclusion, and pushing for greater change. The Committee also said men need to take a more active role in challenging and reporting sexual harassment by other men.

“Firms should see success in this area as not only a moral imperative but a competitive advantage in the attraction and retention of talent,” said the report.

The government and financial regulators also have important roles to play in driving change and combatting sexual harassment and bullying. The Committee welcomed the proposals by the Financial Conduct Authority and Prudential Regulatory Authority to strengthen their non-financial misconduct rules and enhance their ability to take action against individuals in sexual harassment cases to prevent ‘bad apples’ from being able to roll from job to job – as they can do currently.

The report said: “The era of impunity for perpetrators of sexual harassment and bullies must now end.”

The Committee recommended that the FCA takes action to publicise the availability of its whistleblowing line and clarify the circumstances in which it can be used, and to also make clear that an NDA cannot prevent someone from reporting misconduct to the regulator or reporting a crime to the police.

The FCA said in a statement responding to the report that it will prioritise proposals that tighten expectations on firms for tackling misconduct such as bullying and sexual harassment. In addition, the UK regulator will consider the Committee’s recommendations on whistleblowing and the use of non-disclosure agreements.

“The Committee has asked us to consider how we engage with boards and other senior leaders on their firms’ culture and encourage those we regulate to adopt family friendly policies with equality impact assessments,” added the FCA. “We will consider these, and other, recommendations carefully.”

Fund management

The average proportion of women holding senior management roles in financial services was 35% in 2022, up from 27% when the Treasury’s Women in Finance Charter was put in place in 2016, with global/ investment banking and investment management furthest behind.

The Committee said: “This is progress in the right direction, but, at a rate of little over a percentage point a year, it is frustratingly slow.”

Fund management was spotlighted for poor female representation, as well as hedge funds, private equity firms and venture capital.

Baroness Helena Morrissey, chair of the professional membership association the Diversity Project, told the committee that there are big pockets with no progress and that only 12% of named fund managers are women. Morrissey culture remains the big problem.

She said in the report: “That has hardly changed in the whole 36 years since I have been in the City.”

Adam Jacobs-Dean, managing director at trade body the Alternative Investment Management Association, said in the report that the investor base of the hedge fund industry is overwhelmingly institutional, with the majority of assets consisting of pension fund money, so investors can push for diversity.

“In 2020, we published a questionnaire that covers all aspects of diversity, equity and inclusion. [ … ],”he added. “This is something investors can use to scrutinise what their fund managers are doing. That has been very widely used across the industry.”

The Committee added that many of the challenges that women face in financial services are exacerbated for women with disabilities or from ethnic minorities, which was beyond the scope of its inquiry.

“We very much hope that the recommendations in this report will benefit all women, including those with other protected characteristics,” said the report.