UK Regulators Targeting Diversity Improvements In Financial Services

A lackluster economy that’s still recovering from the COVID-19 pandemic isn’t the only issue plaguing the U.K. financial sector these days. Recently, regulators pointed to diversity and inclusion in the space as a serious problem that needs to be addressed — and they offered a few ideas on how to fix it.

In the report, “Diversity and inclusion in the financial sector – working together to drive change,” Financial Conduct Authority Chief Executive Nikhil Rathi, Bank of England Deputy Governor of Financial Stability Jon Cunliffe and Sam Woods, deputy governor of Prudential Regulation and CEO of the Prudential Regulatory Authority, said the lack of diversity must be corrected.

“It is important that we, as financial regulators, play our part in addressing the negative impact this has within financial services, including by prompting the firms we regulate to do more — more quickly — to improve diversity and inclusion within their own workforces,” the authors wrote.

The Women in Finance Charter, the Race at Work Charter and the Social Mobility Task Force are among the efforts in the U.K. sector to address the diversity problem, the report says.

Large gender and ethnicity pay gaps exist in the financial sector, the report notes, and many staffers “do not often have the vocabulary or skills to conduct open and constructive conversations about sensitive subjects such as race.”

“Our goal is to see increased diversity and inclusion in financial services translate into safer and sounder firms with better internal governance and risk management, a more innovative industry and financial products and services that meet the diverse needs of consumers,” the authors wrote.

The push for diversity comes as the U.K. financial sector is seen volatile and in need of stability. Alastair Lukies CBE, founder and CEO of Pollinate, a U.K.-based software firm that focuses on the digital transformation of banks’ SMB offerings, told Karen Webster in March that U.K. financial institutions (FIs) and FinTechs are jostling and jockeying for their “piece of land” in payments and digital commerce.

U.K. market watchdog the Financial Conduct Authority (FCA) cautioned earlier this year that the results of its pandemic resiliency survey indicate some 4,000 companies doing business in the financial services sector lack resiliency and could collapse.