As Chair of Progress Together, representing a third of the UK financial services workforce, I’m disappointed by the Financial Conduct Authority’s and PRA’s decision to row back on their diversity and inclusion proposals. The regulators have a duty to ensure financial markets function well for businesses and consumers, and since 2023, to facilitate the competitiveness and growth of the UK economy. To achieve these statutory objectives, we must fully utilise the talent available to us in the UK.
Mandatory Reporting is Key to Progress
Last year, with The Social Mobility Foundation and upReach, our CEO Sophie Hulm wrote to Sam Woods and Nikhil Rathi in response to their diversity and inclusion consultation. We urged them to make socio-economic background reporting mandatory alongside other key characteristics, rather than leaving it voluntary. Regulation focused on diversity and inclusion is not a barrier to growth but rather a facilitator of growth, as evidenced by other sectors. The Solicitors Regulation Authority has mandated reporting on diversity and inclusion data (including socio-economic diversity) for nearly ten years, and the Social Mobility Employer Index shows that the majority of top performers are law firms. Yet, the UK legal sector is seeing significant growth – regulation and data collection have not held law firms back.
The Economic Case for Action
The economic case for action is compelling. A report launched by the Employment Minister, Demos, and the Co-op Group last October suggested that improving social mobility in UK workplaces could boost GDP by £19 billion annually, generating £6.8 billion in tax revenues and increasing company profits by over £1.8 billion per year. Evidence in financial services shows that employees from lower socio-economic backgrounds take up to 25% longer to progress in their careers, despite no difference in performance. Are we truly as meritocratic as we think we are? How much more productive could we be if we progressed our high performers, not just those that fit the mould?
The Urgency for Change
The need for action is urgent. The Financial Services Skills Commission predicts that 260,000 highly skilled professionals may leave the sector within the next decade, that’s a quarter of the current workforce. At a time when public confidence in the financial services industry remains low, a more socio-economically diverse sector will better understand and serve consumer needs. Cognitive diversity improves decision-making, mitigates groupthink, and ultimately enhances consumer outcomes. If the Financial Services sector addresses the talent and skills challenges, and really does recruit and promote from the best people across all socio-economic backgrounds, it will grow faster and more sustainably in the future.
Progress Together is Ready to Support Change
As Chair of Progress Together, my team is ready to help the financial services sector meet this challenge.
