Even though the UK’s Financial Conduct Authority (FCA), a financial regulatory body that operates independently of the UK Government and is financed by charging fees to members of the financial services industry, has made promoting diversity a top priority for the industry, yet, it does not track the racial and ethnic makeup of firms under its watch.
The regulator of thousands of financial firms in London and across the rest of Britain confirmed it is not collecting the data in response to a request for diversity statistics.
“We recognise there remains much to do to ensure the financial services sector truly reflects the population it serves,” the FCA declared in a statement.
The data gap emerged after Nikhil Rathi, the chief executive designated of the UK's Financial Conduct Authority, pushed the finance industry for increasing diversity.
UK Financial Conduct Authority. Image credit 123RF/Piotr Swat/Business Day
Indeed, the regulator has for several years disclosed the percentage of its staff that is black, Asian and minority ethnic. In the 2019 annual report, the number increased to 26% from a previous 21% in 2014.
Rathi was very clear to British MPs, pressuring them that the FCA could block senior appointments at firms if they do not show enough progress. The regulator has argued that it is important to help firms guard against groupthink, make better decisions and help them compete. Probably, Rathi is trying to achieve what the US achieved, as the Equal Employment Opportunity Commission has for years required diversity data from firms with at least 100 employees. Specifically, the Federal Reserve has more recently requested a diversity self-assessment from banks, after that in 2019, the Fed received only 103 responses from 804 requests.
“Shockingly, 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 MP in the UK, stated. “This is a complete market failure and must change. The government should act to make sure that it does change.”
It keeps a “diversity dashboard” and keeps data on new hires and turnover. It wants people from black, Asian and minority ethnic backgrounds to make up 13% of its senior leadership by 2025, roughly mirroring their share of the UK’s population, up from a goal of 8% this year.
Financial firms are trying to make an effort in compiling such data. For instance, Lloyds Banking Group says that 10.3% of its workforce is from black, Asian and minority ethnic backgrounds, which falls to 7.3% for senior management.
Image credit The British Academy
Also, HSBC, which promised to double the number of black staff across its upper ranks, said it did not track such data. Noel Quinn, chief executive of HSBC since March 2020, outlined steps the lender would take, including updating its recruitment processes.
Advocates for more diversity in business highlighted that a critical step is having more granular data.
“If we are trying to improve the number of black people in an organisation, 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 but also a host of a weekly podcast that informs and educates using applied research and thought leadership, emphasised that “Anyone serious about making strides in this space will be attempting to capture the data.”