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A taskforce that seeks to improve socio-economic diversity at senior levels in financial and professional services firms has been launched, after research found almost nine in 10 senior roles are held by people from privileged backgrounds.
Employees from less-privileged backgrounds take longer to progress in their careers in these sectors, despite no evidence of poorer performance compared to their more privileged counterparts, according to a Bridge Group study commissioned by the City of London Corporation. Black employees took even longer to progress.
Catherine McGuinness, policy chair at the City of London Corporation, said: “Talented individuals should be able to succeed in financial and professional services on their own merit regardless of socio-economic background. Unfortunately, for many people that does not yet seem to be a reality.
“There is a clear business – as well as moral – case for improving diversity across the sector. This research demonstrates that people from lower socio-economic backgrounds face greater barriers to progressing throughout their career.”
The researchers analysed data from eight major employers in the financial and professional services sectors and found 89% of employees at senior manager level and above were from a higher socio-economic background (as defined by parental occupation) and 25% were educated at an independent school – against a national average of 7.2%.
Just under half (42.7%) of senior roles were occupied by white men who attended an private or selective state school.
The problem was not limited to senior roles: 47% of junior employees were from a higher socio-economic background and 11% attended private schools.
Employees from lower socio-economic backgrounds took 25% longer to progress in their careers. This “progression gap” increases to 32% when considering those from poorer backgrounds who also identify as black.
The research involved quantitative data on socio-economic background from 7,780 employees across eight organisations: Bank of England, Financial Conduct Authority, Payment Systems Regulator, BlackRock, First Sentier Investors, Legal & General Investment Management, Santander and one anonymous firm. It also looked at progression data and qualitative data from 102 interviewees.
The new taskforce, run by City of London Corporation, has been commissioned by HM Treasury and the Department for Business, Enterprise and Industrial Strategy, to help tackle the issue. It will be chaired by senior figures from the City of London Corporation, Social Mobility Commission and the Bank of England.
Its objectives will be to:
- Lead an industry consultation on how government, regulators and sector bodies can incentivise firms to take action to improve socio-economic diversity
- Create a membership body for financial services, where employers can benchmark against each other and share best practice
- Produce a productivity analysis to build the business case for increasing socio-economic diversity at senior levels.
Business minister Nadhim Zahawi said: “We know that there is a strong business case for greater diversity across the board, and are acting to support talent irrespective of gender, ethnicity or people’s family and educational background.
“No sector of the economy should be closed off to people from less privileged backgrounds, which is why we are building a Britain that is open to talent and helps people from all walks of life to excel in their career.”
John Glen, city minister and economic secretary to the Treasury, said: “We’re entering a new chapter for UK financial services and it’s vital that firms have the right leadership to grasp the opportunities ahead. That means taking action to ensure that talented people from all backgrounds and parts of the country can reach their full potential. By breaking down socio-economic barriers to progression, our financial services sector will become more innovative and competitive, and help to level up the UK.”
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