Sexual harassment is still “prevalent” in the City despite action to stamp it out - with fears that women are being silenced from speaking out by the use of controversial Non-Disclosure Agreements, MPs have been told.
The Equality and Human Rights Commission issued the stark warning about the scale of sexual misconduct in the Square Mile to the influential Commons Treasury Committee which is investigating “Sexism in the City”.
The EHRC said: “Evidence shows that sexual harassment, particularly of women, remains prevalent in the financial services sector despite existing legal protections and industry commitments to tackle it.”
The Phoenix Group, a large long-term savings and retirement business, told the senior MPs: “Sexual harassment and misogyny are abhorrent and we are concerned that parts of the financial services sector have been slow to grasp the issue.”
Lloyd’s of London, Natwest Group and Metro Bank were among the institutions which explained how they had introduced systems to tackle sexual harassment, including training for senior staff, whistleblowing schemes and support for victims.
Lloyd’s said that following media stories of alleged misconduct within its market in 2019 it had implemented a “set of actions to build an inclusive culture, create better understanding and awareness of sexual harassment, increase reporting, and impose robust sanctions on those responsible for inappropriate behaviour”.
Natwest stressed it had a 24/7 confidential whistleblowing service, operated through an independent third party, and that it would not “tolerate sexual harassment”.
However, in a joint submission, the Association of Mortgage Intermediaries and the Association of Finance Brokers stressed that a “fundamental culture shift” was needed in some parts of the City in relation to sexual harassment and misogyny.
“Many people feel uncomfortable speaking out against offenders as there is often a power imbalance at play and they fear personal and professional retaliation and there is a general consensus that as there is still a ‘tolerable and expected level’ of harassment in financial services which leads to very few successful reprimands,” they added.
Whistleblowing charity Protect said its advice line had seen a rise in the number of cases in recent years relating to sexual harassment.
“Despite strong rules in the FS (financial services) sector more work needs to be done by employers and by regulators to demonstrate that action is taken on reports of sexual misconduct raised, and to prevent whistleblowers being victimised when they speak up to stop harm,” it stated.
Gender diversity campaigners, the 30% Club, which has more than 1,400 chief executive and chair members across several industries in more than 20 countries, warned the MPs about the “contentious use” of Non-disclosure Agreements which it believes are having a “discriminatory impact” on women in financial services and other sectors.
NDAs are agreements which can be struck between an employee and their company to keep confidential details about, for example, a payment made to resolve a dispute.
Bosses have faced accusations that NDAs have been used to hide sexual harrassment cases.
The 30% Club is calling for companies to have to declare how many NDAs they enter into and for this to include a “breakdown of characteristics about the individuals involved”.
The group told the committee: “We believe such a move towards greater transparency would go a long way to improving corporate culture and avoid instances of misogyny and sexual harassment of women in the workplace potentially being concealed and women silenced.”
The Financial Conduct Authority stressed that how firms respond to complaints from staff can “impact their culture”.
The City watchdog added: “Tolerance of inappropriate behaviours can lead to cultures where people do not feel safe to speak up and raise issues.”
Campaigners Can’t Buy My Silence told the committee: “NDAs are regularly misused to conceal complaints of misconduct within otherwise valid settlement agreements forcing cases of sexual harassment, discrimination and abuse underground and fostering an environment of secrecy and abuse.
“NDAs that are misused in this way silence victims and protect sexual predators, bullies, racists and abusers, enabling the behaviour to continue and toxic, misogynistic work environments to flourish.”
The equality watchdog also warned that the gender pay gap in the Square Mile “remains stubbornly high,” stressing that “there is little sign that action to close it has been effective”.
The EHRC said: “Despite the introduction of mandatory gender pay gap reporting in 2017, the gap in the financial services industry continues to be significantly higher than the national average.
“Provisional data released by the ONS shows that the 2022 median gender pay gap in the finance sector, excluding insurance and pension funding, stands at 36.6 per cent compared to 14.9 per cent across all other sectors.”
It acknowledged that there had been “progress towards achieving sex equality” in the finance sector but that this had “tended to focus on executive level roles”.
It highlighted recent reports that the target of 40 per cent of women on the boards of FTSE 350 companies was reached earlier this year, three years ahead of schedule.
It also stressed that the proportion of women in FTSE 100 leadership roles has increased from 32.5 per cent in 2022 to 34.3 per cent in 2023.
“However, significant barriers to women starting and developing their careers in this industry remain,” it added, emphasising that more work needed to be done to tackle “the lack of progression from junior roles, where women tend to be concentrated, to middle management roles”.
The FCA highlighted different success rates for moves to get more women into senior roles, with building societies achieving 43 per cent representation, UK banks 39 per cent, but global/investment banks just 28 per cent.
Only 12 per cent of portfolio managers in 2022 were women, a figure which had only crept up from 10.3 per cent in 2016.
The gender pay gap also remained “exceptionally high” in investment banking, and to a “somewhat lesser extent” in asset management, the FCA stressed, with levels above 40 per cent found in several investment banks last year, and some “with gaps greater than 50 per cent”.
Many firms had focused on “senior level targets and paid insufficient attention to the pipeline of women,” the FCA added, outlining how they often recruited new female staff from outside rather than promoting current workers.
