A damning indictment of the discrimination women face in the City has been issued by a powerful committee of MPs. The Treasury Select Committee also says today that the presence of more women in senior positions in bank boardrooms might have made the financial crisis less severe, as they might have curbed reckless risk-taking. The view, reflected in expert opinion quoted in the report Women in the City, echoes remarks by the Equality minister, Harriet Harman, who once said that "Lehman Sisters" might not have gone broke.
The report says: "The lack of diversity on the boards of many, if not most, of our major financial institutions may have heightened the problems of 'group-think' and made effective challenge and scrutiny of executive decisions less effective."
The committee also warns that if the financial services sector does not put its house in order voluntarily, then legation will be required to force it to do so.
"A sector which is failing to properly utilise the talents of over half the population clearly has substantial room for improvement," the MPs conclude, positing to the "long hours culture" as one of the key factors in discouraging women from careers in finance. The committee says that token representation of women on boards is not good enough, although the Treasury Select Committee itself only has one female member, Sally Keble.
John McFall, chairman of the committee, who is retiring from Parliament at the election, said: "Diversity at the top is one way to challenge potentially dangerous 'group think'. We are not saying that had women been in charge the crisis wouldn't have happened, but we are highlighting the fact that women are poorly represented in the financial sector, particularly at senior level. Moreover, it can only surely be in the interests of financial institutions themselves to try to boost female representation at senior level and thus try to embed diversity and challenge more deeply into the culture of banking."
The report goes on: "The challenge is not so much to change the legal framework, but to change practice and, where necessary, culture. The onus is on the City to demonstrate that it is committed to improving the representation of women at senior levels."
Whilst the committee rejects the idea of quotas, it does not rule out further legal constraint in time. Mr McFall added: "Not only are there disappointingly few women on boards, there is a significant pay gap in financial services. Most worryingly, there is evidence that the pay gap exists at entry level.
"We recommend that the Treasury Committee in the next parliament monitors this: I am sure it will want to see evidence that this voluntary approach is yielding results. If it does not, then the pressure for compulsory measures is likely to grow."
Ms Harman has said that employers should be able to positively discriminate in favour of women, disabled people and ethnic minorities in certain circumstances, and she has said that the Equalities Bill, which should become law before Parliament is dissolved for the election, will end the gender pay gap. Business groups have been campaigning against a planned new reserve power in the Bill which could be used to force employers to disclose details of the race, gender and disability breakdown of their workers.Reuse content