The Women in Finance Charter: Has it Worked?

For the last eight years, the influence of the Women in Finance Charter has been growing across the finance sector, with over 400 companies (covering 1.3 million employees) committed to its aim of increasing female representation in senior management.¹

The Charter was created after it was revealed that many young female graduates join financial services firms, but in most cases ‘these women do not progress beyond the mid-tier, or they leave the sector entirely,’ meaning that ‘As employees rise in seniority, unequal gender representation in financial services worsens.’ Such a trajectory is a big problem for the finance sector, as a balanced and diverse workforce ‘is good for customers, for profitability and workplace culture, and is increasingly attractive for investors.’

In March 2024, the Charter published its seventh annual review, assessing 202 of its signatories against its commitments and four key principles, listed as the following:

• Having one member of the senior executive team who is responsible and accountable for gender diversity and inclusion.
• Setting internal targets for gender diversity in senior management.
• Publishing progress against these targets annually.
• Having an intention to ensure the pay of the senior executive team is linked to delivery against these internal targets on gender diversity.²

As the Women’s Recognition Awards are about celebrating equality, diversity and inclusion across the mortgage industry, we decided to examine how much progress the finance sector has made since the creation of the Charter in 2016, and just how much work still needs to be done.

What has worked?

The numbers suggest that the Charter is having a positive impact, with over a third of the signatories analysed in this review having met their targets for representation. Overall, female representation in senior management increased by one percentage point to 35% between 2022 and 2023, which is consistent with almost every annual rise since the launch of the Charter. If this progress remains consistent moving forward, a significant number of signatories may have reached 50% by 2038.

The companies that are achieving the highest targets include AIB UK, Pepper (UK), and Financial Services Compensation Scheme, all of which met their 2023 deadline of 50%. Meanwhile, Financial Reporting Council, Cumberland Building Society, and Nest all met targets of 50% ahead of future deadlines.

The review also listed a range of actions taken by companies in an attempt to boost female representation at the top levels. These were categorised under four key themes: ‘recruitment, retention and promotion, behaviour and culture, and embedding diversity and inclusion into everyday business.’

One of the most notable actions mentioned in the 2022 review was a shift in how signatories use data, with more companies ‘tracking promotion rates for sponsees and returners, measuring uptake of family friendly policies, and looking at the impact of actions via gender pay gap monitoring metrics.’³ The seventh annual review highlights that this focus on data has continued, stating that ‘1 in 7 signatories closely monitor recruitment activity and 10% reported reviewing their processes.’

The review also mentions that one in eight companies have put in place a returners programme (or equivalent) designed to encourage women to return to work after a career break. For example, Lloyds Banking Group has implemented a returners programme that offers permanent roles ‘from day one’ for people returning to work after a break of 18 months or more, with some roles ‘exclusively available’ for returners.⁴

In addition, 56 signatories have reported a focus on menopause awareness, up from 35 in 2022. Some examples include Jupiter Asset Management, who have added the menopause and period problems to their medical cover, while Citi and EY have both introduced free period products throughout their UK locations. Actions such as these are even more important following the news that almost a quarter of working women (3.5 million) have considered quitting their jobs due to the impact of menopause or menstrual symptoms in the workplace.⁵

Flexibility has also been a big draw for many companies, with 95% of signatories having adapted their models to include forms of hybrid working. In March 2023, a report by the Trade Union Congress (TUC) revealed that 1.46 million women were out of work due to their caring responsibilities, making them 7 times more likely than men to leave the labour market for this reason. This increases to 12 times for Black and Minority Ethnic women.⁶

A widely accepted solution has been the right to flexible working. In the finance sector, the importance of being able to take on a hybrid role has been much discussed, with many female employees stating that it has given them the chance to balance their careers with caring for children or elderly parents. According to the Charter, many signatories have a blended working model in place for employees, with a minimum of two mandatory office days. Non-standard hours, core hours, location-less working, and fully remote working are also listed as common approaches taken by firms in the sector.

Furthermore, the Flexible Working Bill came into effect on 6th April 2024, granting workers more rights when requesting part-time work, flexitime, job sharing, staggered hours, hybrid and home working. Employees can now request flexible working from day one of employment, whereas previously they had to wait six months, and they can also now make this request twice a year. Meanwhile, employers now have two months instead of three to make their decision and will need to consult with the employee before rejecting their request.⁷

What still needs work?

While the number of signatories on target has increased at a consistent rate, the Charter makes it clear that the one percentage point annual increase is still very susceptible to change, particularly considering the ‘economic and geopolitical challenges’ that firms face today. It also wouldn’t be the first time that this has happened - in 2021 the initial impact of the pandemic caused the average level of female representation in senior management to ‘plateau’ at 33% year-on-year. The Charter also noted that the prospect of ‘trailing sectors’ reaching parity as early as 2038 is highly unlikely, with some of the signatories in these groups reporting levels of female representation in senior management that are as low as 17%.

There are also many other issues to address in the meantime, many of which intersect with female representation in senior management. Earlier in 2024, TUC revealed that it will take until at least 2044 to close the gender pay gap at its current rate (0.4 percentage points per year), and that on average, women currently work a whole seven weeks for free annually. This is even worse in the finance and insurance sector, where the gender pay gap is the widest in the UK - 27.9% compared to the average of 14.3%.⁸

Moreover, while a lot of progress has been made in terms of flexible working since the pandemic, an increasing number of companies have started to demand that their employees return to the office at least part time, taking away the flexibility that is so crucial to many women with caring commitments. According to a survey by Financial News London, 180 City workers said their required office days had increased, and 38% of them considered quitting their job because of this.⁹ Additionally, a recent survey by Reed Recruitment reported that the number of remote jobs being advertised has dropped by about a third since 2022, while ‘flexible’ jobs only made up 16.5% of the total vacancies advertised on their site in February 2024.

This is particularly worrying when it comes to gender diversity in the workplace - according to Reed Recruitment’s report, mothers with full-time jobs are 2 and a half times more likely than fathers to ask for a flexible working model upon returning from parental leave. In a Bloomberg article covering the report, Zurich UK’s Chief People Officer Steve Collinson stated that ‘A lack of access to really good quality, flexible and part-time job opportunities was essentially holding women back in their careers,’ meaning that a return to more rigid working structures could become a significant setback in future reviews of the Charter.¹⁰

Furthermore, sexual harassment in the workplace is still a huge industry issue. A new report by MPs published in March 2024, titled ‘Sexism in the City’, revealed that sexual harassment in the City has remained ‘shockingly prevalent.’ At the same time, efforts to improve the situation are reportedly moving at a ‘snail’s pace’ - 70% of whistleblowers end up being victimised while the actions of perpetrators are often ignored.¹¹

Meanwhile, a recent report by the Association of Mortgage Intermediaries (AMI), found that 8% of respondents had experienced sexual harassment, inappropriate behaviour, bullying, physical harassment or violence, something which the executive director of The Intermediary Mortgage Lender (IMLA) Kate Davies described as making for ‘pretty uncomfortable reading.’¹²

Overall, the seventh annual review of the Women in Finance Charter pointed out several areas where the finance sector has actively been working to improve both female representation in senior management and the working lives of all its female employees, suggesting that the Charter is having an impact on the industry. Unfortunately, though, there is still a lot of work to do.

This is why the Women’s Recognition Awards aims to celebrate all the women at every level of our industry - anyone who is striving to do their best in their career and serving as a role model for the next generation. If you’ve shown exceptional dedication, outstanding customer service, or have been pushing to make the industry a fairer, more equitable place for everyone, then make sure to send in your applications and nominations before 5pm on 21st June 2024. Good luck!

Sources

1. HM Treasury Women in Finance Charter: Annual Review 2023 - PowerPoint Presentation (publishing.service.gov.uk)
2. Women in Finance Charter - women_in_finance_charter.pdf (publishing.service.gov.uk)
3. HM Treasury Women in Finance Charter: Annual Review 2022 - PowerPoint Presentation (publishing.service.gov.uk)
4. Returner opportunities - Lloyds Banking Group plc
5. 3.5 million women have considered quitting job due to menopause and menstrual health symptoms (simplyhealth.co.uk)
6. Women 7 times more likely than men to be out of work due to caring commitments | TUC
7. Flexible Working - Help to Grow
8. TUC: Gender pay gap means women work first two months of the year unpaid | TUC
9. Finance firms crack down on hybrid work as staff rebel (fnlondon.com)
10. Less Flexible Working in UK as Employers Offer Fewer Part Time and Remote Jobs (bloomberg.com)
11. Sexism in the City (parliament.uk)
12. Show leadership against bullying and sexual harassment, mortgage industry is urged | Mortgage Introducer (mpamag.com)