The financial services sector has long been pledging to ‘deliver’ greater diversity and inclusion.
But creating an industry that mirrors the wider population is not just about delivery, it must be driven by individual organisations as part of a sector-wide push.
And the Financial Conduct Authority (FCA) has been at the forefront of this, by promoting inclusivity across all of its departments and managerial levels.
Sheldon Mills, director of competition at the FCA, told International Adviser that the watchdog has set up an executive diversity committee (EDC).
It is chaired by executive director of strategy and competition Christopher Woolard and its mission is shared by senior managers across the organisation.
“I think that shows you that there’s a huge commitment to diversity across the board, at the top end,” Mills said.
Tangible efforts
But it is not only about a shared commitment, Mills added.
On top of publishing its gender pay gap, the FCA will also reveal its ethnicity pay gap for the first time this year.
Collecting statistics, Mills said, is a starting point for change.
“What the FCA has done in terms of the pay gap on gender, and ethnicity this year, is also important, and then having a plan to think about how one tackles that, through the groups and other policies within the organisation.”
Visibility plays an important role as well.
Seeing diversity
Earlier this year, IA reported that 92% of LGBT+ financial services professionals want visible role models at both executive and board levels, according to industry representative organisation LGBT Great.
“On the LGBTQI+ side, there’s a lot of support [at the FCA], and a huge number of events especially during LGBT history month,” Mills said.
“We had a big presence at [London] Pride this year, we participated with a number of other regulators including the Bank of England. We also had a stall at UK Black Pride which demonstrates our commitment to intersectionality.”
But that has to translate into the wider industry as well, which is why the regulator has been looking at firms’ internal culture.
“What’s the culture of organisations alongside issues of psychological safety? And how can financial services firms serve all consumers in a way which meets their individual needs.”
Healthy transition
The intention to tackle companies’ culture and governance was also set out in the FCA’s business plan for 2019-20.
“Good governance, which enables effective oversight of decision-making, is critical for reducing potential harm to consumers or markets,” the regulator said.
“Culture also plays a critical role. A healthy culture, focused on delivering consumer outcomes, helps individuals in firms to make the right judgements that do not result in consumer or market harm.
“Conversely, weak governance or poor culture increase the likelihood that harm will occur.”
Think differently
Christopher Woolard, executive director of strategy and competition and chair of the executive diversity committee, addressed this issue earlier this year.
“The power of diversity [is] to help organisations make better decisions, to think in the long-term, to prosper.
“After all, why wouldn’t you want to draw on the full experience, opinion and insight of your workforce? Comforting though it may be, shouting your own opinion loudly into an echo chamber never did much to advance the great questions of the day – just look at Twitter.
“The real nuggets – the perspectives that make you stop and think – come from people who cause you to think differently. To look at something from a new angle or see something in a new light. So, we need to get different voices around the table.
“The key is different voices.
“We need varied life experiences – race, age, social background, sexual orientation, education… the list goes on. True diversity comes when you’re open to – and make space for – them all.
“Because the ingredients you put into the mix, determine the dish that comes out.”
Setting the standard
Mills also told IA that the FCA has a duty to set the example, not just internally as an organisation, but as the financial regulator as well.
“I think the FCA does have to act, as best as it can, as a role model.
“You also need to find a way to get diverse senior leaders into organisations, who are either BAME or LGBT+, or female, or trans or disabled and support them to grow, and be their authentic selves.
“And then those people will be role models for the people who are coming to work in the organisation.
“But also, from a regulatory perspective, if industry can see the regulator itself is diverse, it might be in their own interest to also have a diverse workforce and this sends a signal that diversity is important.”
Blurred enforcement
Is there more the FCA can do?
There has been a lot of speculation about whether the regulator should be in charge of enforcing the Equality Act 2010 within the industry.
This piece of legislation protects people from diverse backgrounds, ethnicity, people with disabilities, different religion, sexual orientation and gender identity from discrimination.
The UK treasury select committee suggested earlier this year that, as the body in charge of the promotion and enforcement of equality and non-discrimination – namely the Equality and Human Rights Committee (EHRC) – doesn’t have the resources, the duty should be transferred to the FCA.
But that is something the regulator’s chief executive, Andrew Bailey, disagreed with.
He said: “As the UK’s financial regulator, we apply our specialist knowledge of financial services markets to determine whether those markets are working in the interests of all consumers and to formulate interventions where we see harm and enforce them.
“We have the resource and the expertise to pursue our statutory objective, through supervising firms, conducting market studies and holding consultations to propose evidence-based interventions to address the harms we see.”
Bailey added: “Ensuring compliance with the Equality Act is generally beyond our expertise as a financial services regulator. However, protecting consumers – particularly vulnerable consumers – is deeply in the DNA of the FCA.”
Last Word is the exclusive industry media partner of LGBT Great, a financial services representative organisation focusing on diversity and inclusion.
