Call for Mandatory Ethnicity Pay Gap Reporting in Financial Sector

A consortium of significant investors has called upon the Financial Conduct Authority (FCA) to implement compulsory reporting of the ethnicity pay gap for financial institutions in the United Kingdom. This move is viewed as a pivotal measure in fostering more equitable work environments and addressing racial disparities.

Led by responsible investment charity ShareAction, a letter signed by 10 prominent investors, including Nest, the Church of England Pensions Board, Brunel Pension Fund, Pensionbee, and Ethical Partners Fund Management, underscored the necessity of transparent disclosure of racial wage discrepancies. These investors assert that such transparency will drive further efforts to promote diversity and inclusion within the financial industry.

The letter highlighted the underrepresentation of Black, Asian, and minority ethnic individuals in managerial positions, with only one in 10 such roles held within UK financial institutions. The signatories emphasized the need to double this figure to align with the FCA’s objectives and accurately reflect the ethnic composition of the country.

Additionally, the investors noted that while some investment firms voluntarily disclose ethnicity pay gap data, mandatory reporting is still warranted. They observed that although such reporting has contributed to transparency and action, more needs to be done to address substantial pay differentials among various ethnicities at different levels of seniority within organisations.

In response to the FCA’s consultation on enhancing diversity and inclusion in the financial sector, the investors, collectively overseeing assets worth over £93 billion, asserted that mandatory ethnicity pay gap reporting is vital for raising workforce standards within the industry. This call for compulsory reporting follows the UK government’s shift away from its 2018 commitment to mandate ethnicity pay gap reporting, opting instead for a voluntary code.

Kohinoor Choudhury, senior campaigns officer at ShareAction, stressed the significance of ethnicity pay gap reporting, stating that it transcends fair pay and plays a crucial role in ensuring that financial institutions accurately mirror the society they serve. Choudhury emphasized the need for the FCA to heed investors’ call for mandatory reporting as an essential initial step in creating a more inclusive workforce in the financial sector.

The PA news agency has sought comment from the FCA on this matter. The push for mandatory ethnicity pay gap reporting in the financial sector reflects an increasing movement towards addressing racial disparities and promoting diversity and inclusion within UK workplaces.