As the United Kingdom still struggles with board diversity, some new studies are emerging.

New Financial, a think-tank set up in 2014, this month published Women in UK Financial Services 2016: Putting the Gadhia Review and HM Treasury’s Women in Finance Charter in Context. In July 2015, the economic secretary to the Treasury, Harriett Baldwin, invited Virgin Money CEO Jayne-Anne Gadhia to lead a review of women in finance to try and solve a number of diversity problems in the industry. On 22 March, the Ghadia Review into the representation of women in senior managerial positions in financial services was published. New Financial provided the data for the Gadhia Review, whose major recommendation was “that every financial services firm operating in the United Kingdom be encouraged to publish its own inclusion strategy and targets on an annual basis—and that progress against these internally generated targets be reported.” The report also recommended a series of positive actions that firms could take. These are shown in Box 1.

Box 1: Positive Actions

Invest in supportive people managers
Create the right culture
Provide technology which supports flexible working
Ensure there are transparent pay structures
Increase the number of female role models
Implement good flexible working policies
Support working parents
Offer mentoring schemes and ‘active’ sponsorships
Provide opportunities for women to gain commercial experience
Source: Ghadia Review


The direct consequence of the Gadhia Review was the Women in Finance Charter, which asks financial services firms to commit to implement four key industry actions. Firms can sign the Charter and formally commit to implement these recommendations by visiting the website and completing the online form.

The key industry actions are:

having one member of our senior executive team who is responsible and accountable for gender diversity and inclusion

setting internal targets for gender diversity in our senior management

publishing progress annually against these targets in reports on our website

having an intention to ensure the pay of the senior executive team is linked to delivery against these internal targets on gender diversity

The data analysis in the new New Financial review includes:

Average female representation across the industry and within different sectors

What types of roles women hold on both excos and boards

The impact of nationality and ownership on excos and boards

Which companies are already taking a lead on female representation

And the survey analysis includes:

Practical aspects of implementing the Gadhia recommendations and Charter principles

Common issues that financial services companies face both internally and externally and how they overcame those hurdles

How companies expect to benefit from becoming a signatory

Suggestions on best practice for potential signatories

In order to write the report, New Financial collected data from 200 companies and institutions across 12 different sectors: banking groups, investment banks, challenger banks, building societies, asset managers, two sets of diversified financials companies, fintech, private equity, venture capital, and hedge funds.

Box 2: Charter Signatory Themes

Consistency with existing direction of travel: signatories already had diversity initiatives
Industry-wide approach: signatories wanted to demonstrate leadership to the industry sector
Reputational benefit: strong message to existing and prospective employees and expected a positive impact on recruitment and retention.
A catalyst for discussions and actions on gender and beyond
Internal governance process and time frame: the tone from the top was seen as essential
Executive accountability
The big debate on targets: achievable vs aspirational
How the target is incorporated into pay: most logical step was to incorporate into balanced scorecard approach
Granular diversity data reporting and measuring: New Financial recommends reporting against a set of 10 data points on gender ratios at board level and downwards
Permanent sustainable change for the industry: the report names the top 20 financial services companies for diversity
Source: New Financial

Nearly a quarter (23 percent) of board directors of U.K. financial services companies are women, but only one in seven (14 percent) executive committee members are female. The United Kingdom compares favourably with some countries but worse than others. It lags the Nordic region, France, and the Netherlands, does better than the United States on non-executive directors but worse on executives, and vice versa compared to Germany. Women executives are also found in really only a few roles, typically, such as head of HR (61 percent) and head of communications (52 percent). There are very few female CEOs and CFOs in finance and no executive chairs at all.

The level of diversity disclosure is also very variable, according to the survey, depending on the issue being disclosed. Almost 90 percent mention diversity, while 77 percent disclose quantifiable diversity data but only 27 percent set diversity targets.

In order to identify the benefits of signing onto the charter, New Financial in May interviewed six of the founder signatories: Columbia Threadneedle Investments, HSBC U.K., Legal & General, Lloyds Banking Group, RBS, and Virgin Money. A series of themes emerged from their responses. These are given in Box 2.

The report notes that if progress is not demonstrable, the spectre of quotas from the government will loom large as the Charter is wide-reaching, applying to 5,000 regulated companies. The Charter is very flexible, however, allowing companies to nominate the accountable executive, choose their targets, and how to link diversity to pay. The report concludes: “Setting diversity targets need not be as frightening as it first appears. Having targets helps to focus people’s minds and turns improving diversity into a business objective. No financial services company would expect sales to improve without setting a target and having a strategy to achieve it.”

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