Financial Services sector get women and BAME on board

By Henry Adefope

Sector exceeds Gov gender and BAME targets ahead of time

In 2016, the government-backed Hampton-Alexander review set an ambitious target of 33% of executive board positions at FTSE 100 and FTSE 250 firms to be held by women by the end of 2020, while the 2017 Parker review set a10% representation target for BAME  by the end of 2021/24. It was a challenge which seemed daunting at the time. But new research by global communications firm, SEC Newgate UK[1], suggests the FS sector has far exceeded this benchmark. 

When observing gender representation across the FTSE 350 company boards within Financial Services (FS), there has been remarkable progress; women now make up nearly two-fifths (38%) of available board positions, which may well be the highest at any point in history.

We observe a similar narrative regarding ethnic minority representation. The 2017 government-backed Parker review gave FTSE 100 firms until the end of 2021 to appoint at least one BAME board-level director, on a voluntary basis. The same target was set for the FTSE 250 companies, but with a deadline of 2024. Across the listed FS Sector, BAME representation has hit the 10% mark (equivalent to one BAME board member per board), thereby meeting Government targets with time to spare. The commitment to drive this proportion up is evident among some of the most notable names; Schroders recently claimed they will not use its shareholder vote if a FTSE 100 firm has not met the Parker Review.

Frankly, it represents a watershed moment for the Financial Services sector[2]; a sector which appears to be pushing up the average with increasingly diverse representation, well ahead of Government targets.

Some of the most culturally diverse boards on show were from the likes of some big names like HSBC and Alliance Trust, while the insurance sector particularly stood out for the consistent level of diversity across the boards in that sub-sector, with the likes of Admiral Group, Legal & General, Hiscox and Phoenix standing out. The London Stock Exchange Group also led by example.  In broad financial services, Hargreaves Lansdown, AJ Bell and Man Group also deserve honorable mentions.

Many critics have, however, duly highlight that the gender and ethnic minority targets, should be far greater than they currently are, and that current targets are insufficient to foster true culture transition. The FCA heeded this call and toward the end of last year the FCA set new proposals, building on the Hampton-Alexander review of 2016, that are more ambitious.

1. At least 40 per cent of the individuals on the board should be women
2. At least one of the Chair, the Chief Executive, the Chief Financial Officer, or the Senior Independent Director should be a woman and
3. At least one individual on the board should be from a non-white ethnic minority background

The approach by the FCA to continue the fantastic momentum and will likely be heeded by the financial services sector – if recent performance is anything to go by. Even at this point the listed FS sector are not far from meeting this benchmark.

The scale of progress the Financial Services sector has made culturally in such a short space is no mean feat; progress no less bolstered by dogged in-sector campaigning by groups like the 30% Club and the Diversity Project, and with this concerted effort multiple players, perceptions of the sector are changing for the better in parallel with this cultural transition in regulated, business leadership.  The faces in the boardroom being more representative of the organisation, and wider society, will always be good for business, and it’s fantastic to see the UK Financial Services meet and exceed the challenge.

Hopefully this is just the start.

[1] Numerical observation that utilised data from London Stock Exchange, Financial Times, and corporate websites  up until 07.01.22

[2] Financial Services sector includes Banking Services, Investment-related and Insurance companies across the FTSE350