Diversity Is One Number U.K.’s Finance Regulator Doesn’t Track
Diversity Is One Number U.K.’s Finance Regulator Doesn’t Track
(Bloomberg) -- The U.K.’s Financial Conduct Authority, which has made promoting diversity a top priority for the industry, doesn’t yet track the racial and ethnic makeup of firms under its watch.
The regulator of thousands of financial firms in London and across the country confirmed it isn’t collecting the data in response to a request for diversity statistics.
“We recognize there remains much to do to ensure the financial services sector truly reflects the population it serves,” the FCA said in an emailed statement.
The data gap emerged after Nikhil Rathi, the watchdog’s incoming chief executive officer, put the finance industry on notice that it needs to increase diversity. Rathi told U.K. lawmakers that the FCA could block senior appointments at firms if they don’t show enough progress. The regulator has argued that it’s important to help firms guard against group-think, make better decisions and help them compete.
“It is quite shocking that so little effort is being made to monitor the levels of discrimination in the finance sector, one of the highest-paid in the country,” Diane Abbott, the first Black woman member of U.K. Parliament, said in a statement. “This is a complete market failure and must change. The government should act to make sure that it does change.”
Diversity Dashboard
The regulator has for years disclosed the percentage of its own staff that is Black, Asian and minority ethnic. The number increased to 26% in its 2019 annual report, up from 21% in 2014, the first report published after the FCA was formed the previous year.
It keeps a “diversity dashboard” and keeps data on new hires and turnover. And it wants people from BAME backgrounds to make up 13% of its senior leadership by 2025, roughly mirroring their share of the U.K.’s population, up from a goal of 8% this year.
Currently, financial firms take different approaches to compiling such data. Lloyds Banking Group Plc says that 10.3% of its workforce is from BAME backgrounds, which falls to 7.3% for senior management.
HSBC Holdings Plc, which pledged last week to double the number of Black staff across its upper ranks, said it didn’t currently track such data. CEO Noel Quinn outlined a series of steps the lender would take, including updating its recruitment processes.
Granular Data
Advocates for more diversity in business say a critical step is having more granular data.
“If we are trying to improve the number of Black people in an organization, first we need to understand where we are and then measure that progress,” said Jonathan Ashong-Lamptey, a diversity campaigner and consultant to FTSE 100 companies. “Anyone who is serious about making strides in this space will be attempting to capture the data.”
In the U.S., the Equal Employment Opportunity Commission has for years required diversity data from firms with at least 100 employees. The Federal Reserve has more recently requested a diversity self-assessment from banks; in 2019, the Fed received only 103 responses from 804 requests. The central bank attributed the low rate to firms’ worries that the data could become public.
©2020 Bloomberg L.P.