New taskforce to boost socio-economic diversity in UK financial and professional services sectors
A new taskforce is being launched to improve socio-economic diversity at senior levels in financial and professional services across the UK.
The independent taskforce, commissioned by HM Treasury and BEIS and run by City of London Corporation, is launched today (24 November) and will focus particularly on boosting representation at the top of these sectors.
The taskforce is launched alongside new research – commissioned by the City of London Corporation and authored by the Bridge Group – published today. This finds that almost nine in ten senior roles in financial services are held by people from higher socio-economic backgrounds. This compares with a third of the UK working population as a whole.
The report – which draws on data from eight major employers in the financial services sector – also finds that employees from less privileged backgrounds take 25% longer to progress, despite no evidence of poorer performance.
To tackle the lack of socio-economic diversity at all levels, the taskforce will:
- Lead an industry consultation on how government, regulators and sector bodies can incentivise firms to take action to improve socio-economic diversity;
- Create a membership body for financial services, where employers can benchmark against each other and share best practice on delivering socio-economic diversity at senior levels;
- Produce a productivity analysis, to build the business case for increasing socio-economic diversity at senior levels in financial and professional services.
John Glen, City Minister and Economic Secretary to the Treasury, said:
“We’re entering a new chapter for UK financial services and it’s vital that firms have the right leadership to grasp the opportunities ahead. That means taking action to ensure that talented people from all backgrounds and parts of the country can reach their full potential. By breaking down socio-economic barriers to progression, our financial services sector will become more innovative and competitive, and help to level up the UK.”
Business Minister Nadhim Zahawi said:
“We know that there is a strong business case for greater diversity across the board, and are acting to support talent irrespective of gender, ethnicity or people’s family and educational background.
“No sector of the economy should be closed off to people from less privileged backgrounds, which is why we are building a Britain that is open to talent and helps people from all walks of life to excel in their career.”
The taskforce will be chaired by Catherine McGuinness, Policy Chair at the City of London Corporation and three Co-Chairs: Sandra Wallace, Interim Chair of the Social Mobility Commission, Andy Haldane, Chief Economist at the Bank of England, and Alderman Vincent Keaveny, Senior Alderman at the City of London Corporation.
The taskforce is being launched at the same time as new research on socio-economic diversity in financial services shows a lack of representation:
- 51% of respondents at all levels of seniority were from a higher socio-economic background (as defined by parental occupation). This compares with 33% of the wider working population.
- 16% of the survey respondents attended an independent school - over double the national figure of 7.2%.
- Among junior employees, 47% were from a higher socio-economic background by parental occupation; and 11% were educated at an independent school.
- For senior level employees (senior manager and above), this rises to 89% and 25% respectively.
- Just under half (42.7%) of senior roles were occupied by white men who attended an independent or selective state school.
- Employees from lower socio-economic backgrounds took 25% longer to progress through grades. This ‘progression gap’ increases to 32% when considering those from lower socio-economic backgrounds who also identify as Black.
- This ‘progression gap’ cannot be explained by performance. There was no statistical evidence to link performance with socio-economic background.
- Those from lower socio-economic backgrounds frequently expressed that they spend time and effort on assimilating to dominant higher socio-economic cultures. This is likely to have serious implications for individual and organisational productivity, and wellbeing.
Policy Chair at the City of London Corporation, Catherine McGuinness, said:
“Talented individuals should be able to succeed in financial and professional services on their own merit regardless of socio-economic background. Unfortunately, for many people that does not yet seem to be a reality.
“There is a clear business – as well as moral – case for improving diversity across the sector. This research demonstrates that people from lower socio-economic backgrounds face greater barriers to progressing throughout their career.
“We hope that firms will seize the opportunity the taskforce provides to develop a more diverse pipeline by ensuring they are truly recruiting and promoting on merit.”
Chief Executive of Bridge Group, Nik Miller, said:
“This pioneering research should interest anyone across the sector who cares about productivity and equality. It must also catalyse action.
“The evidence indicates that greater cross-sector collaboration is essential, and that change will be slow without effective data collection and associated accountability. If we are to be led by performance rather than polish, we must develop transparent processes – including project allocation, promotion and senior sponsorship.
“To feel proud of the sector that they will leave behind, senior leaders must play their role in creating change - but, while there is good work already underway, it is the responsibility of the whole sector and its clients to address the corrosive social dynamics that impact on individual performance and wellbeing, and organisational productivity. Now is the moment to do this"
The research report is available to read here: https://www.thebridgegroup.org.uk/news/seb-in-finance
Notes to editors
Further information on the Taskforce
Full membership of the taskforce will be finalised in due course. It will be supported by PwC, Deloitte and MyKindaFuture. The City of London Corporation will report back on the findings of the taskforce by November 2022, with the first formal meeting due to take place in May 2021.
The research involved quantitative data on socio-economic background from 7,780 employees across eight organisations: Bank of England, Financial Conduct Authority, Payment Systems Regulator, BlackRock, First Sentier Investors, Legal & General Investment Management, Santander and one anonymous firm. Progression data and qualitative data from 102 interviewees also informs the report provided from the majority of the organisations. While the sample does not aim to be representative of the entire sector, it provides insight into how financial services can respond to these shared challenges.
About the City of London Corporation
The City of London Corporation is the governing body of the Square Mile dedicated to a vibrant and thriving City, supporting a diverse and sustainable London within a globally-successful UK. www.cityoflondon.gov.uk
About the Bridge Group
The Bridge Group is a non-profit consultancy that uses research to promote social equality.