The Financial Conduct Authority (FCA) has expressed increasing apprehension regarding the lack of diversity and inclusion within the financial sector. The FCA is concerned that the absence of diverse representation in the industry could have significant ramifications for the recruitment and retention of talent.
The underlying issue lies within the workplace cultures of financial companies and the potential power dynamics at play. Matters such as sexual harassment, bullying, and non-financial misconduct have raised concerns, prompting the necessity for immediate action.
Recent research has revealed concerning statistics. The Race to Equality report in 2021, commissioned by the Reboot professional network, conducted a survey of 800 mid-to-senior level financial services employees. The findings showed that 66% of respondents from ethnic minority backgrounds had experienced discrimination in their careers. Surprisingly, only 36% believed that their companies were genuinely committed to diversity and inclusion. Furthermore, 48% claimed that their career progression was significantly slower than that of their white colleagues. Deloitte’s findings also disclosed that only 19% of executive positions in banking, capital markets, and payments were held by women.
It is essential to cultivate a positive workplace culture to attract and retain top talent, foster innovation, and tap into new talent pools. It is crucial to establish an environment where employees at all levels feel comfortable speaking out against unacceptable behaviour and trust their employers to uphold fairness and reasonableness. This can only be achieved through a culture of psychological safety.
Given that the financial services sector contributes to approximately 12% of the UK’s total GDP, its success is crucial for economic stability and growth. The FCA acknowledges that the industry’s future depends on becoming more representative of the UK population and meeting the needs of a diverse customer base. This requires a more inclusive workforce, greater diversity in senior positions, and confidence in career advancement opportunities, as well as effective management styles and behaviour.
In response to these concerns, the FCA is urging major firms to develop their own diversity and inclusion strategies, establish objectives and targets, address under-representation, and publicly report on their progress. However, setting out principles and targets alone may not effectively address the underlying cultural issues. Recent threats of fines and bans to senior managers found in breach of expected standards of behaviour, and the decline in ‘whistleblower’ reports following such announcements, suggest that a different approach is needed to foster openness and encourage staff to come forward with their concerns.
HR teams in the financial sector can play a pivotal role in shaping a positive workplace culture with a focus on psychological safety. Key steps include establishing a behavioural framework that outlines expected conduct, ensuring robust and fair HR investigations, offering informal mediation or restorative interventions, deploying skilled mediators and trainers, supporting the career progression of under-represented groups, and creating a culture that fosters open and constructive conversations.
In conclusion, while the FCA’s efforts to promote diversity and inclusion are commendable, relying solely on targets may not be sufficient to address the deep-seated cultural issues within the industry. A multi-faceted and proactive approach is necessary to create a workplace environment where diversity and inclusion are not just aspirational goals, but integral components of the sector’s identity.
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