FCA has published a report following its multi firm review of how firms are designing and embedding D&I strategies. Its review covered 12 fixed portfolio firms across multiple sectors, and consisted of it asking for information and then having a structured interview with each firm. It made its selection based on gender pay gaps, choosing 8 firms with large gaps and 4 with relatively small ones.
Generally, FCA found a surprising degree of consistency – most firms had started “serious” efforts in 2019 or 2020. Interestingly, there was no obvious correlation between the amount of progress made and the scale of the pay gap. Although almost all interviewees were committed to making progress, FCA found many firms lacked a holistic view and a clear articulation of what actions were needed to achieve their goals, and very few had understood D&I as a fundamental culture issue.
Most firms were focussed on gender representation, with ethnicity beginning to receive more attention, and both of these before other characteristics. Firms were most focused on improving representation at senior leadership level despite data that shows the biggest drop off is from junior to middle management grades. FCA criticised this practice as risking creating an unsustainable approach of poaching diverse senior talent.
Other criticisms were:
- that strategies were not always based on the firm’s specific circumstances and challenges;
- firms were not consistently tracking the effectiveness of that they were doing;
- that many firms suffered from poor data quality, usually because of poor levels of staff declarations;
- some firms overrelied on training and similar initiatives, while few could show have D&I goals affected pay and bonus, despite having policies on this;
- global firms tended to have a global policy, with little focussed on the needs of the UK organisation; and
- firms were not generally considering whether there were compounded issues for people who belong to more than one minority group.
FCA has provided feedback to all firms involved and will follow up through the usual supervisory routes.