About The Other Half 

The Other Half is a non-partisan think tank which develops policy in the interests of UK women.   We are currently exploring how women’s needs from work are being met in the 2020s[1], including how inclusion can best be targeted to meet women’s needs in the coming decades. This response includes initial findings from that work, including from interviews with senior leaders and current and former employees of major UK financial services institutions.

Key messages

The Other Half find that there remain substantial barriers to women’s retention and progression in the financial services industry.  This is despite real progress since 2018 in women’s representation at board level, the extraordinary shift to hybrid working through the pandemic, and the increased focus on gender through corporate pay gap reporting and now Environmental,  Social and Governance (ESG) reporting.

There is plenty of good working culture in financial services, with some organisations making real efforts to value diversity of contribution. Women do report cultural challenges which block their progress, for instance not being considered credible in seeking technical[2] or revenue generating roles.  Sexual harassment is too frequent, and firms’ responses are too often wholly inappropriate.

Women work hard to overcome these blockers, but the overwhelming issue identified in our work to date is the loss of women from the industry altogether in mid-career, after they have children. This loss seems due largely to rigid adherence to “male default” definitions of working and career patterns, which mean parenting and other care cannot be accommodated. Crucially, female talent is still being lost at the point that their careers should be progressing to more senior levels.

Senior leaders across the financial services industry are often remarkably fluent on both the causes of and solutions to barriers to women’s progression in their firms. As one leader told us: “it’s mothers – as an organisation we’re absolutely terrible at mums”. This fluency is not universal, however, and there is still some resistance to real change.

Much corporate DEI[3] activity has shifted focus in recent years away from activity targeted at accommodating the needs of mothers, despite this being a core focus of previous decades. Real efforts to embed non standard working patterns and career paths have fallen out of fashion and The Other Half believe are due a rediscovery.  There are many senior leaders across the industry who are already championing these ideas, but official DEI activity needs to link up with this.

The progress in removing the barriers to women entering and progressing their careers across the financial services industry, including progress to financial services firms’ Boards, including executive roles;

The loss of female talent in early and mid career due to male default working and career patterns

There remain significant issues due to “the leaky pipeline”, where women leave the industry in mid career. Many women are excluded from participation in the industry once they have children, particularly if they wish to return to work part time or with material flexibility. This is a careless loss of talent and drives the lack of women available for more senior roles.

Despite the very successful push to expand paid paternity leave, women take longer parental leave and are around ten times more likely to return part time[4]. Much DEI thought-leadership[5] says we should aim to achieve equal parenting in order to secure women’s progression. The Other Half recommends that we should not make women wait while we try to equalise parenting: we should get on with designing work that fits around care.

Those working in the industry commonly identify that the pressing requirement is to make flexible working – specifically part time working – actually work within their organisations. Although this may seem both obvious and easily within reach, it requires greater organisational commitment than hiring women into part-time roles and leaving them to succeed or fail.

The failure to capitalise on the positives of post-pandemic working practices

Most women  report that the greatest recent change to their opportunities for progression has been the near wholesale shift to hybrid working since the beginning of the Covid pandemic.  This extraordinary event has shifted workplace culture to allow a degree of autonomy over working times too, allowing children to be collected from school or nursery. Women tell the Other Half that it is this flexibility that has allowed them to return to their roles after having children.

But some of these gains are already being rolled back with mandatory work-from-office orders, and the narrowing of the definition of ‘flexibility’. Some leaders see modest post-pandemic flexibility as a significant concession, for instance pointing to dads who come in an hour later a few days per week to drop off their child at nursery, without considering the other drop off and pick ups that must still be accommodated the rest of the working week. This is not a trivial point: this very modest flexibility is far less than is needed to accommodate parenting, and stem the loss of female talent after they become mothers.

Measures which don’t directly address the challenges

Official DEI activity to shift women’s progression is often focused on recruitment advertising, talent management, career coaching and confidence building[6]. This is likely to be reflective of this still being seen as an Human Resources-led solution rather than a business problem.  Other Half interviews find that there is often limited, if any, impact at the organisational level required to resolve the issues with women’s progression.

Senior leaders and women in financial services tell us they are working hard to make headway for women in their areas, however their work is often disconnected from the official organisational DEI activity. This presents significant issues with getting buy-in from Boards and other leaders, who may view the DEI policy work as sufficient.

There has been a material refocusing of DEI work to encourage women’s progression over the last 5 – 10 years. If the 2010s were focused on making space for mothers and care work through part time working, non linear career paths and return to work programmes, the early 2020s focus on equal parenting, unconscious bias training and on (some) flexibility for all.

The solutions for the issues women face are not new, but they must be made to work

Most of the great ideas needed to retain women in the industry already exist, but they must be implemented as successfully as any major organisational change. Examples we find of well-intended but ultimately ineffective solutions include:

A company policy that all roles are flexible by default, but in practice:

·        Recruitment intermediaries will not put forward female candidates seeking part time or materially flexible working, or will only do so with a very significant pay reduction. Candidates tell us they believe this is due to hiring manager policy, or potentially a negative impact on recruiter remuneration for placing a part time hire.

·        Hiring manager opt outs mean that the only roles advertised as part time/materially flexible are those which are “career backwaters” with no chance at progression.

A returners programme aimed to help those coming back after a career break, but where:

·        All/almost all returners’ roles require full time working.

·        Returners are brought back at a lower level of seniority than they left, requiring them to go through onerous internal promotions processes again but - this time - with young children to look after.

Organisations which engage seriously with the challenges are likely to succeed. As an example, Zurich[7] noted the lack of women applying for more senior roles. In 2019 Zurich moved to make all roles available part time, developing this offer with the (then) Government Behavioural Insights Unit. This resulted in a 95% increase in women joining on part time basis and a 45% increase in women joining in senior roles.

The impact of the Treasury’s Women in Finance Charter and any other Government and Regulator initiatives;

There is no settled science on the most effective approaches to ensuring women progress in financial services.  The Charter takes a broadly neutral position on both the causes of barriers to women’s progression and the solutions, giving signees the freedom to choose ‘how’ they achieve change. In addition to a degree of public accountability on targets, the Charter has influence over firms’ activities through the sharing of good practice and occasional requests to signees to consider particular themes, such as hybrid working impacts on women.

Both Government and Regulators can provide firms with vital information on ‘how’ change can effectively be achieved. Recently, the Financial Conduct Authority has carried out commendably forensic review of sample firms’ diversity and inclusion activities.  We’d also recommend that the assessments by The Equalities Office[8] and the Government-funded Behavioural Insights[9] on “What Works” should be revisited in light of the gains made in recent years, particularly through hybrid working practices, the roll out of paid paternity leave, and developments in DEI focus.

The progress on implementing the Treasury Committee’s 2018 recommendations:

Recommendation 10 on women returning from maternity leave.

There has been mixed progress, with our research finding some leaders won’t consider maternity returners for promoted roles because “they assume they’ll have another baby”. Returners programmes continue to be offered by corporates and regulators such as the Bank of England. As highlighted earlier, the design of returners programmes is not always well-targeted at the needs of those returning from parental leave.

Recommendation 13 on greater prevalence of men taking childcare responsibilities and parental leave.

The recent shift to workplace policies which aim to expand the caring role of fathers are extremely welcome and there is a strong business case for these attracting and retaining the best male talent[10]. Public bodies and large corporates increasingly offer paid paternity leave equal to that of maternity leave, and these policies see very high take-up by eligible fathers. Examples include:

·        The Financial Services Compensation Scheme recently targeted recruitment with an offer to dads of up to 26 weeks’ paid paternity leave[11]. The FSCS paternity offer has had 100% take up by eligible employees, and the FSCS is also committed to truly flexible working patterns.

·        Aviva’s offer of six months’ paid shared parental leave has been wildly popular with fathers, with 80% taking 5 months’ leave[12]. Note that women continue to take more maternity leave and return part time more frequently: with female employees taking 10 months of leave on average, of which 4 months would be unpaid. Women also make up 90% of those who return to work part time at Aviva after a child.

However popular these measures are, they do not directly address the core issue of working patterns which must accommodate the demands of parenting or other care. This care work is borne mostly by women, and there is good evidence that this remains the case even when women are the higher earners in a relationship[13]. 

Recommendation 15 on flexible working being seen as a “female” approach to working

There has been unimaginable progress in flexible working: with 91% of Charter signees[14] implementing hybrid working [vs. 26% in 2019] thanks to the challenges of the Covid pandemic. Overall however, the impacts have been mixed. Women make more use of flexible, home and part time working than men. There are clear signs that some leaders are defaulting to ‘male default’ patterns of working again, as we discuss earlier, assuming that a very minimal flexibility offered to fathers is sufficient concession to flexible working.

The progress on removing gender pay gaps in financial services and in implementing measures to address such gaps;

The key pay gap driver identified by financial services industry firms [15]  is the underrepresentation of women in senior roles.  Pay gap reporting provides an opportunity for firms to set out barriers to women’s representation and progression in their organisations. It remains the case that some activity to improve women’s representation and progression can increase pay gaps, including part time working (which may lead to bonus gaps) and attempts to recruit more women at junior levels.

The Other Half has found that many employers still prioritise DEI measures which aim to “change women” rather than “change the organisation”. Examples of favoured measures include coaching of women, activities to improve women’s career confidence; mentoring; and training (for women) on balancing demands of work and parenting[16], and even paid egg-freezing benefits so that female employees can delay motherhood[17].

Good practice activities disclosed in pay gap and other corporate reporting - which aim to change organisations - include:

·        Organisational work to expand part time working at middle and senior management levels.

·        Returners programmes and specifically those which have returners roles available part time and with material flexibility.

The role of the Government and financial regulators in: Acting as role models for good gender diversity practices,

Financial services public bodies including regulators make a significant contribution through their own offers of truly flexible, hybrid and part time working patterns. These organisations are recognised by women returners as offering roles and career paths that are more likely to allow them to progress. These organisations also have strong representation of women at the most senior levels.

The benefit to women of these working practices is not universally valued, with increasing push by Government ministers and some business leaders for workers to return to offices. This rolling back can be seen in some public bodies, such as The FCA[18] and  The Bank of England[19] recently mandating a 40% office based requirement for employees.

The role of the Government and financial regulators in: Ensuring appropriate data is collected and published,

Government and regulators are uniquely placed to influence the data that is collected across financial services and will expect to have confidential access to some of this data. Some public bodies are already undertaking high quality data collection, including:

·        The Financial Reporting Council’s ongoing work[20] to collect data on gender imbalance and barriers to progression among UK actuaries.

·        The Financial Conduct Authority’s work[21] to understand themes in diversity and inclusion in regulated firms, highlighting the loss of female talent at junior levels and the challenges firms face in addressing women’s lack of progression.

Overall, there appears to be no joined up strategy around data collection however, and some glaring gaps:

·        The Bank of England and FCA do not currently collect sex data on regulated individuals. A novel FOI request[22] on insurer senior management honorifics identified that there has been very limited progress in women reaching the four key senior roles, with greatest representation of women in senior management roles like internal audit, head of the remuneration committee or compliance.

·        The Women in Finance Charter asks signees about the kind of data they collect but does not particularly seek to influence or access that data. For instance, strikingly few Charter signees collect data on pregnancy/maternity status[23], despite these being protected characteristics and arguably one of the key data points which drive women’s representation in the industry.

The role of, and progress of, firms, Government and financial regulators in combatting sexual harassment and misogyny in financial services, and offering effective ways to escalate concerns about sexual harassment.

Many women have told us that sexual harassment continues in certain organisations– and that this ranges in severity from criminal harassment through to inappropriate behaviour like the sexual pursuit of junior team members by male, married, senior leaders.

Firms do not treat sexual harassment or misogynistic behaviour as an ongoing risk that should be anticipated and dealt with as it arises. Instead, it is still too common for firms to treat women reporting harassment or misogynistic behaviour as an existential threat and act to remove the woman from the organisation with a payout. The treatment of women who report sexual harassment can become common knowledge within firms and serves to act as a warning to others who may consider reporting.

This is in stark contrast to work by financial services organisations to improve treatment of workers who identify other business and reputational harms like money laundering or internal fraud.  Financial Services staff receive regular training on the importance of identification of these risks, how to disclose them and the fair treatment of those who disclose. This well-established and regulator-driven approach may be the best model for Government and regulators to follow in ensuring that firms have robust and appropriate procedures in place to manage the harms of sexual harassment and misogynistic behaviour.

The FCA do consider “non financial” misconduct[24] in regulatory approvals but action is needed on a much wider scale than this can address.

[1] The Other Half, Women Work and Inclusion, 2023

[2] See also Innovate Finance and EY Changing the face of UK FinTech: from glass ceiling to open doors: championing equality and career progression for women in FinTech, 2023

[3] Diversity, Equity/Equality and Inclusion

[4] Zurich found that 23% of female hires were part time vs. 2% of male, Aviva finds 90% of part time returners are women.

[5] For example: equal parental leave will have the benefit of “supporting women to not be out of work for longer periods of time in comparison to men.” the FTSE Women Leaders review, 2023, “Equal parental leave is the key to addressing the gender pay gap” Bain and Company/BITC, 2023

[6] The Other Half review of Gender Pay Gap reporting from major UK employers, 2023

[7] Zurich: What would happen if you could apply for every job on a part time basis? January 2023

[8] Government Equalities Office, Actions to Close the Pay Gap, 2017

[9] Behavioural Insights How to improve gender equality in the workplace, 2021

[10] Bain and Company/BITC Equal at Work, Equal at Home, March 2023

[11] FCSC Family Friendly Careers, 2023

[12] Aviva: Takeup of equal parental leave at Aviva remains high after four years, 2022

[13] Institute for Fiscal Studies, The Careers and Time Use of Mothers and Fathers, 2021

[14] New Financial analysis of Women in Finance, 2023

[15] The Other Half review of Gender Pay Gap reporting from major UK employers, 2023

[16] This is consistent with the findings of the Women in Finance Charter 2023 review, where the top activities were coaching/mentoring, female leadership programmes, and those aimed at widening the recruitment market such as targeted job advert wording.

[17] The Other Half, Women's perspectives on egg freezing, 2023

[18] Investment Week: FCA announce 40% return to office, August 2022

[19] Bank of England 2023 Annual Report: Ways of Working, July 2023

[20] Financial Reporting Council Survey of Women's Progression  2023

[21] FCA Understanding approaches to D&I in financial services, December 2022

[22] Michael Stefan FOI Request 2023

[23] New Financial analysis of Women in Finance, 2023

[24] Farrer: Three recent decisions from the FCA highlight Regulator’s stance on criminal sexual misconduct and domestic abuse, January 2021.