The UK’s prudential regulator is “not making sufficient progress, or moving quickly enough” to diversify its ranks, its chief has said.
Sam Woods, the Bank of England’s deputy governor for prudential regulation and head of its regulatory arm the Prudential Regulation Authority, has vowed to make “strenuous efforts to improve” its diversity and inclusion record in a series of prepared remarks released ahead of his speech to finance executives at the annual Mansion House dinner on 22 September.
“Greater diversity and inclusiveness will aid the quality of our work and… as a national institution which relies on trust and confidence it is appropriate for us broadly to reflect the public we serve,” Woods’ speech read.
“Coming from a white, middle-class background – and arguably also being a man – can make it easier to navigate an institution with the sort of heritage the Bank naturally has,” Woods said. “I don’t believe it is a single or small number of big issues which create that difference – it is mostly many, many smaller things repeated day in day out in people’s experience of working life. We should iron those differences out.”
Doing so, will take a “focused effort over time because changing attitudes and rooting out biases is not an easy task”, his speech read.
Woods also took aim at City firms themselves when it comes to stepping up though.
“While improving ourselves we also need… to help the financial sector do likewise,” he said. “The PRA has a legal duty to promote equality… there is a clear and direct linkage from a lack of diversity and inclusion in firms through to groupthink and from there through to financial disasters.”
In July, the Bank of England, the Financial Conduct Authority and the Prudential Regulation Authority published a sweeping set of policy recommendations in a bid to increase diversity and narrow the gender pay gap within financial services.
The financial regulators’ proposals included that firms should link pay to metrics on diversity and inclusion and make those at the top directly accountable for falling short.
The regulators also suggested using targets around the representation of under-served groups, and revising the regulators’ approach to tackling diversity and inclusion in areas of non-financial misconduct, such as workplace sexism, homophobia and sexual harassment.
Woods’ comments come less than a week after he said the UK’s central bank will require more staff if the government pushes ahead with plans to transfer EU laws into domestic regulation in the wake of Brexit.
The senior regulator’s comments were made in response to a Treasury committee report that suggested that select EU financial services rules should be on-shored into the UK’s rulebooks after the nation’s departure from the bloc.
Woods did not further elaborate on those remarks at the 22 September Mansion House dinner. Instead, he set out how the PRA intends to help failing firms exit the market, and to streamline the regulator’s approach to rule-making post-Brexit.
“A reliably safe exit process is a vital corollary of ease of entry, as it allows us to be more accommodating to new entrants,” he said.
“Our plan to bring in a simpler regime for smaller banks and building societies,” he added. “The question now is how to design the simpler regime.”
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