MPs leading an inquiry into sexism and misogyny in the city of London have called for tougher rules to end the “era of impunity” for offenders.
However, the recommendations also called on both financial regulators to “drop their plans for extensive diversity data reporting and target setting” in an apparent bid to shift more responsibility onto senior leaders and board members at offending firms.
The Treasury Committee’s ‘Sexism in the City’ report confirmed, yet again, a ‘shocking’ prevalence of sexual harassment, bullying, and a culture that holds women back.
Recommendations
The committee called for a ban on the use of non-disclosure agreements (NDAs) and for changes to strengthen protection for whistleblowers in sexual harassment cases.
Under the recommendations, prospective employers would be banned from asking for salary history and a legal requirement to include salary bands on job adverts would be introduced.
Current rules that require employers with 250 plus employees to report on their gender pay gap would be extended to include employers with just 50 plus employees in the financial services sector.
Dame Amanda Blanc said that there are many organisations such as hedge funds, private equity firms and boutique investment firms that have fewer than 250 employees that “probably warrant more scrutiny” given the prevalence of diversity and inclusion issues.
Employers with wide gender pay gaps would also be required to explain the disparity and publish an action plan.
However, the report also said “regulators should drop their plans for extensive diversity data reporting and target setting”.
MPs recognised and welcomed the role of the Prudential Regulation Authority and the Financial Conduct Authority. But they voiced concerns that their proposals requiring firms to implement strategies, collect and report data and set targets would be costly to implement and have unclear benefits. “[These proposals would] not capture the many smaller firms that the inquiry has heard have some of the worst cultures and levels of diversity.”
The report stated: “In our view, a lack of diversity is a problem that the market itself should be able to solve without such extensive regulatory intervention. Boards and senior leadership of firms should take greater responsibility for improving diversity and inclusion given that it should lead to a competitive advantage in the development of talent.
“Firms that perform best on diversity and inclusion and have the best cultures should be able to benefit from the clear business advantages this provides, leaving those that perform badly in these areas to suffer the consequences for their reduced competitiveness and profitability.”
Changes to the Women in Finance Charter were another focus for the report, which urged the charter to strengthen the link between executive pay, and performance on improving diversity.
“We recommend that all financial services firms, particularly private businesses, hedge funds and other smaller firms, sign up to the voluntary Women in Finance Charter,” the report said.
