Watchdogs need to be bold to boost diversity in the City

The City has come a long way since the first women were admitted to the floors of the Londonstock exchange and the Lloyd’s insurance market just over 50 years ago. But not as far as it might like to think.

Its two main watchdogs, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), today published consultation papers on boosting diversity in the industry.

Some of the statistics published with the documents make for sobering reading. Even in 2023 just 12% of fund managers are female, while fewer than 19% of executive positions in banking, capital markets and payments in the UK are held by women.

Representation of people from an ethnic minority background in the higher echelons of financial services lags even further behind.

The papers suggest that making the City’s boardroom and trading floors more reflective of British society as a whole — and particularly London — can promote “healthy work cultures, reduce groupthink and unlock talent”.

According to FCA chief executive Nikhil Rathi: “For UK financial services to be competitive and for the companies in it to be well run with healthy work environments, it’s vital they attract, retain and promote the best talent. The data suggests this isn’t happening. Our proposals will encourage the largest firms to put in place plans and report against their delivery.”

Welcome words of course, but progress is achingly slow.

Today’s proposals build on a discussion paper dating back to summer 2021, and a follow-up policy statement is not dueuntil next year. That is an awful lot of well-intentioned paperwork for a problem that has dogged the City for many decades.

The FCA and the PRA are right to focus on the issue and must be bold in the implementation of their plans.