Members of Parliament (MPs) of the UK are pushing for new legislation that would prohibit financial firms in the City from using legal orders to silence victims.
This call comes after a parliamentary investigation uncovered a disturbingly high incidence of sexual harassment and bullying targeting women in the UK’s financial industry.
The recommendation stemmed from the Treasury Committee’s inquiry titled “Sexism in the City.” The inquiry highlighted concerns regarding the slow progress in advancing and safeguarding the rights of women in one of the country’s most profitable sectors.
During the eight-month investigation, MPs engaged in hearings with City executives, financial regulators, government officials, and women working across the sector.
They expressed shock at the widespread nature of sexual harassment and bullying, which even extended to serious offenses like sexual assault and rape.
Moreover, they criticized the inadequate handling of such allegations by financial firms.
They were also critical of the “widespread misuse” of non-disclosure agreements (NDAs), saying they had the effect of “silencing the victim of harassment and forcing them out of an organization while protecting perpetrators and leaving them free to continue their careers and go on and abuse others.”
The influential cross-party committee is calling on the government to ban NDAs in harassment cases and strengthen protections for whistleblowers.
Meanwhile, firms need to embed a “zero tolerance approach” to misconduct across the UK’s financial and professional services industry, which employs about 2.5 million people and accounts for approximately £278bn or 12% of the country’s economic output.”
The chair of the Treasury committee, Harriett Baldwin, remarked, “This well-paid sector will only be able to maintain its competitive advantage if it is able to draw on the widest possible pool of talent. That’s why it is so frustrating that efforts to tackle sexism in the City are moving at a snail’s pace.”
MPs, who initiated the inquiry following sexual harassment allegations against hedge fund boss Crispin Odey and within the Confederation of British Industry, emphasized the importance of men playing a more proactive role in confronting and reporting inappropriate behavior by their male counterparts within their organizations.
According to the report, “The elimination of sexual harassment, including serious sexual assault, and bullying should be a minimum standard expected to be guaranteed across the sector. It is a source of deep concern to us that this has not yet been achieved. This needs to be addressed, and urgently.”
Issues About Income Disparity
The committee also expressed concerns about the City’s slow progress in achieving equal pay and promoting female leaders.
Despite government initiatives like gender pay gap reporting and the Women in Finance charter, intended to boost the number of women in top roles, the anticipated change has not materialized.
The financial sector still maintains the UK’s largest gender pay gap. Even among firms committed to the Women in Finance charter, the proportion of women in senior roles increased modestly from 27% in 2016 to 35% in 2022.
While this marked progress, the committee found the rate, slightly over one percentage point annually, frustratingly low.
The report urged signatories of the charter to establish a stronger correlation between executive pay and efforts to enhance diversity.
MPs called for employers to be prohibited from soliciting salary history and mandated to disclose pay ranges in job postings.
They also advocated for extending gender pay gap reporting requirements to smaller firms with fewer than 250 employees, including private equity and hedge funds, which typically have less diverse workforces.
Furthermore, concerns were raised regarding the removal of the bonus cap, which previously limited banks to paying bonuses no more than twice an employee’s salary.
The committee cautioned that this move could worsen pay disparities and pressed the Financial Conduct Authority (FCA) and the Bank of England to conduct a formal review of its impact on gender pay in two years.
The FCA was contacted for comment and it said it would “reflect on the range of views received”.
