Senior managers and executives at the Financial Conduct Authority risk having their bonuses cut, after the City regulator said it was unlikely to meet key gender diversity targets under its outgoing chief executive, Andrew Bailey.
The FCA was one of the 71 original signatories of the Women in Finance Charter. The voluntary charter requires organisations to set targets to raise the number of women in senior roles.
The FCA made a commitment to increase the proportion of women across its senior ranks to 45% by 2020 and 50% by 2025, but figures show that, as of September, just 41% were held by women.
With time running out, the FCA said it was unlikely to reach its commitment by 31 March – 15 days after Bailey takes up his role as the new governor of the Bank of England.
“Reaching our interim gender target was always going to be challenging,” the FCA said. “While we are taking positive action, we do not have a high turnover or large number of new posts at SLT [senior leadership team] level so have not yet been able to achieve enough positive changes to reach the 45% gender target.”
The watchdog said would push ahead with its “positive action programme” and that it hoped the number of women recruited and promoted increased. Signatories of the charter have to pledge to link executive pay to those targets. The FCA signed up to the charter in June 2016, a month before Bailey started as chief executive.
FCA executives, directors and heads of department face cuts to their bonuses for failing to meet the regulator’s Women in Finance commitment, which is one of a number of metrics used to determine performance-related pay. Bailey, however, will avoid any financial repercussions, as his bonus for 2019-2020 will be scrapped as a result of his appointment as Bank of England governor.
Staff are not eligible for bonuses if they leave the regulator before April, when bonuses are paid out for the previous financial year. That policy applies to all employees, including the chief executive. Last year Bailey received a pay package worth £592,000 including £68,000 in bonuses.
A total of 123 companies and organisations signed up to the charter’s commitments, including Barclays, Royal Bank of Scotland and the Financial Ombudsman. A progress report in March showed that women only make up 31% of senior management roles on average, and only 45% of signatories had met or exceeded their targets. The report estimated that about 2,500 women would need to be recruited or promoted across the 123 signatories over the coming years in order to meet their targets.
Referring to the FCA’s diversity performance, a spokeswoman for the regulator said: “Bonus payments are based on individual performance against a number of objectives, including D&I [diversity and inclusion]. Progress against the objectives set is assessed in the same way as all our business objectives.”
FCA executives whose pay could be affected as a result include Christopher Woolard, who is in charge of strategy and competition at the regulator. He received a £45,000 bonus as part of his £413,000 pay package last year.
Bailey will begin an eight-year term as Bank governor on 16 March 2020. The Bank of England – another original signatory of the charter – said in June that it was on track to meet its own 35% target by the end 2020. However, it was not able to provide recent figures. The recruitment consultancy hired to find a replacement for Carney was Sapphire Partners – a London-based firm run by an all-female management team, with a focus on diverse recruitment.
Bailey’s successor at the FCA will be under pressure to recruit more women to senior roles if the watchdog hopes to increase the proportion in senior roles to 50% by 2025. The Treasury is poised to announce an interim chief executive to take his place until a permanent replacement is found.
However, the FCA could end up replacing those targets or extending the time frame, as has been done by fellow signatory TSB.
The challenger bank scrapped its commitment to raise the number of women in senior roles to 45% to 55% by 2020, after an internal review found it had not made enough progress. Despite appointing its first female chief executive, Debbie Crosbie, in May, the number of women in senior roles at TSB fell from 41% in 2017 to 38%.
In October, TSB notified the Treasury that it would not meet its target on time and would porbably take another five years to reach its original goal.
The Guardian understands that bonuses for both executives and managers will be docked. A final decision will be made by the bank’s remuneration committee in the new year.