MPs are calling for new laws that would ban City firms from using gagging orders to silence victims, after a parliamentary inquiry found a “shocking” prevalence of sexual harassment and bullying against women in the UK’s financial sector.
It is one of the key recommendations to come out of the Treasury’s committee’s Sexism in the City inquiry, which raised concerns about a lack of progress in promoting and protecting women in one of the UK’s most lucrative industries.
MPs – who held hearings with City executives, financial regulators, ministers and women from across the sector over eight months – said it was “shocking to hear how prevalent sexual harassment and bullying, up to and including serious sexual assault and rape, still are in financial services, and how poorly firms handle allegations of such behaviours”.
They were also critical of “widespread misuse” of non-disclosure agreements (NDAs), saying they had the effect of “silencing the victim of harassment and forcing them out of an organisation, 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, as well as 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, said: “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 launched the inquiry after sexual harassment allegations against the hedge fund boss Crispin Odey, and at the Confederation of British Industry – stressed that men needed to take a more active role in challenging and reporting bad behaviour by other men in their firms.
“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,” the report said.
The committee also raised concerns about a lack of progress on equal pay and female senior leadership across the City. It said neither of the government’s flagship initiatives – gender pay gap reporting and the Women in Finance charter – in which firms voluntarily commit to bespoke targets to raise the number of women in top roles – “has brought about the change that was hoped for”.
The industry still has the largest gender pay gap of any UK sector. Among the companies that are Women in Finance charter signatories, the average proportion in senior roles rose to just 35% in 2022, from 27% in 2016. “This is progress in the right direction, but at a rate of little over a percentage point a year, it is frustratingly low,” the committee said.
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The report called on charter signatories to forge a stronger link between executive pay and progress on improving diversity. MPs said employers should also be banned from asking for salary history, and should be required to list pay bands on job adverts. They are also calling for gender pay gap reporting rules to be extended to smaller firms with less than 250 staff, including private equity and hedge funds, which have some of the least diverse workforces.
Additional concerns were raised about the removal of the bonus cap, which previously restricted banks to paying no more than two times an employee’s salary. The committee warned it could exacerbate pay inequalities, and it was pushing the Financial Conduct Authority (FCA) and the Bank of England to formally review in two years’ time the ripple effects on gender pay.
The FCA said it would “reflect on the range of views received”. The Treasury was contacted for comment.