The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have today launched consultation papers aimed at boosting diversity and inclusion in financial services.
Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “While it is good to see diverse faces in high places, it is not a panacea to diversity and inclusion issues.
“It is vital for workplaces to be representative of the society they serve to develop a greater understanding of the very real differences in economic outcomes for different groups. But representation can be skin deep only without chipping away at the inequalities and barriers marginalised communities face.
“Diversity without substance sells the illusion of inclusion. We have to move past hiring practices and authentically develop systems and cultures that allow people to flourish regardless of their background. Acquiring good data on diversity is essential to bring about and measure improvement.
“The financial industry has a huge role to play. The challenge is to proactively endeavour to understand how the status quo plays a role in producing unequal economic outcomes, how it directly contributes to wealth inequality and establish what needs to be done for a more inclusive financial system – a key enabler in reducing poverty and boosting prosperity.
“Many firms report GDPR and legal concerns as a barrier to collecting and holding data. As such, it is important that any new report D&I data framework will address and allay these fears. As data such as ethnicity, sexual orientation and disability are all considered sensitive according to GDPR, meaning the way the information is used or stored have stricter requirements compared to info on age and gender, the next challenge is building trust and encouraging employees to disclose the relevant information. Transparency around how the data will be used and why it is important to collate the information is necessary if employers want the best engagement from employees.
“Diversity and inclusion initiatives are crucial in fostering more equitable and innovative solutions that lead to better problem-solving, service and outcomes for everyone – including those in marginalised communities.
“When we talk about diversity, we're not just talking about the usual suspects like race or gender, we're diving into the deep end of the pool including ethnicity, religious belief, age ability, neurodiversity, sexual orientations and beyond. When people from diverse backgrounds and cognitive styles are involved, it reduces the risk of groupthink and ensures that various viewpoints are considered.
“The financial industry rightly shines a light on gender inequality, but other strands of diversity desperately need a turn in the spotlight.”
The proposals would require certain firms to:
- report their average number of employees to us on an annual basis
- collect, report and disclose certain D&I data
- establish, implement and maintain a D&I strategy
- determine and set appropriate diversity targets • recognise a lack of D&I as a non-financial risk
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