Cracks beginning to show in financial services ‘class ceiling’ but still more to be done according to Progress Together
The proportion of those working in senior roles in UK financial services from a lower socio-economic background has increased from 26% in 2023 to 28% today, according to new research from Progress Together, the organisation representing 55 member firms from the UK financial services sector.
Response rates to the key questions on socio-economic background from the sector have also risen significantly. The average proportion of employees submitting socio-economic data has increased to 58%, up from 49% in 2023.
The data has been analysed by the Bridge Group, a charitable consultancy that advises on social equality.
Sophie Hulm, CEO at Progress Together, said:
“Senior leaders in this critical sector create organisational cultures that shape societal standards about the ownership of capital – and guide the investment of personal and business assets. Appointments to these roles should be based wholly on competence and efficacy – rather than on factors related to background. Today, nearly two thirds (58%) of those working at senior levels in UK financial services are from a higher socio-economic background.
“More than 1.1 million people in the UK work in financial services,1 and the industry paid over £110 billion in taxes last year. The sector’s contribution to economic output totalled £244 billion in 2023.”
The 2024 Progress Together study is the largest of its kind globally, examining the link between socio-economic background and progression to the most senior and influential positions in UK financial services. This evidence far exceeds the data available in the UK Labour Force Survey and builds positively on last year’s inaugural data collection cycle (published in Shaping Our Economy).
This year’s study includes data from 200,000 employees, including socio-economic background and detailed information about rates of progression and other diversity characteristics such as gender and ethnic background. The study was compiled by The Bridge Group, in collaboration with Progress Together.
Key findings of the 2024 research include:
- Levels of socio-economic diversity reduce as seniority increases: 58% of those at senior levels are from a higher socio-economic background, compared with 45% at junior levels.
- The proportion who attended an independent school is also higher among those in senior positions – 21% against the national percentage of 6.5%
- White men from higher socio-economic backgrounds are thirty three times more likely to be found in senior roles in financial services compared with women with an ethnic minority background who are also from a lower socio-economic background.
- The pipeline of talent for senior financial services roles lacks diversity, especially at the middle level of seniority, where on average more than half (51%) of employees are from a higher socio-economic background. Diversity at junior levels is relatively positive.
- People from a higher socio-economic background are promoted on average six months faster than those from a lower socio-economic background from junior to mid-level roles – for mid to senior roles this gap is slightly smaller at three months.
- Among all combinations of gender and ethnicity, those from higher socio-economic backgrounds are much more likely to be found in senior roles compared with their peers from lower socio-economic backgrounds. White females from higher socio-economic backgrounds are more than two times more likely (2.1x) to be found in senior roles compared with this same group from lower socio-economic backgrounds. Those who are from an ethnic minority background and also from a higher socio-economic background are more than two times as likely (2.3x) to be in senior roles compared with this same group from lower socio-economic backgrounds.
Sophie Hulm continued:
“We strongly believe the FCA and PRA should mandate the collection and reporting of socio-economic background data, as the Solicitors Regulation Authority (SRA) has successfully done for several years.”
“In addition, we are advising our members to:
- Set goals and be accountable for change, work towards parity, where the socio-economic backgrounds at senior levels mirror the rest of the workforce.
- Explore the relationship between socio-economic background and performance. Leading law firms recently explored this and found that those from lower socio-economic backgrounds were over-represented in this high performing group.
- Develop talent and leadership programmes targeted at those from a lower socio-economic background. Nationwide has funded a pilot Accelerated Progress Programme (APP), delivered by TLC Lions, where employees from lower socio-economic backgrounds join a cohort with others from Coventry Building Society, Paragon Bank, and Yorkshire Building Society. They are provided with learning and development opportunities, a mentor, a sponsor, and the opportunity to be seconded to another employer for six months.
- Implement policies and approaches that measure and ensure greater equality in work / client / project distribution by socio-economic background.
- Explore the experiences and perspectives of employees to help inform action. A report published by The Inclusion Initiative (TII) at the London School of Economics and Political Studies (LSE), in partnership with Progress Together and sponsored by HSBC, highlights that workers in finance from lower socio-economic backgrounds (LSEBs) do not have equal voice in their organisations. It also includes selected actions that individuals, managers, and firms can take to progress talent from lower socio-economic backgrounds in their firm.
- Engage with Executive Search firms. Experienced hiring demands greater focus since this aspect of recruitment risks undermining the gains realised at entry-level hiring and progression.
“Achieving lasting change in this important area is a marathon not a sprint. We are grateful to our members for submitting their data and for their continued efforts to improve access and opportunities for everyone in one of the UK’s most strategically important sectors. However, there is still a huge amount of work to do to ensure that people from lower socio-economic backgrounds are not excluded from progressing to the highest levels of the UK financial services sector.”
Mark Hoban, Chair, Financial Services Skills Commission and former City Minister, comments:
“The demographics of the UK financial services sector do not reflect society as a whole. This impacts the sector’s ability to relate to a wide range of consumers, sound decision-making, and innovation. As the demand for tech and AI skills rises, companies that embrace diversity will be best positioned to ‘win the war’ for talent. To maintain its global competitiveness and to meet its obligations to society, the sector must improve.”
Richard Oldfield, Chief Financial Officer, recently announced as Peter Harrison’s successor as Group Chief Executive at Schroders, a founding partner firm of Progress Together, comments:
“We have seen a significant increase in enquiries from investors about socio-economic diversity in the last 12 months. Importantly, our focus on broadening talent has positively impacted our culture within the firm. Everyone should feel they belong and that they can progress in their careers, regardless of their starting point in life.”
Here are some photographs from the launch of our event:
