Sexism in the City: Financial services five years on

How much has changed in financial services in five years? Not much, according to the Sexism in the City inquiry. 

After its predecessor, the Women in Finance inquiry, reported on a range of barriers faced by women in financial services in 2018, the Sexism in the City inquiry was launched in 2023 to establish what progress (if any) had been made. The inquiry’s report, published on 8 March 2024, revealed a number of findings and recommendations. 

Ongoing challenges

Whilst “incremental improvements” were identified in the number of women in senior roles in financial services firms, the inquiry found that serious barriers remain. These include:

  • The prevalence of sexual misconduct and bullying, and the lack of appropriate action taken by firms in response. 
  • The widespread misuse of NDAs to ‘cover up’ allegations of sexual harassment and abuse. 
  • The scale of the gender pay gap. The financial services sector continues to have the largest gender pay gap out of any sector in the UK, with only a small reduction in the average gender pay gap in recent years. 
  • The lack of cultural change. This is even worse for women with disabilities and those from ethnic minorities. 
  • Firms continuing to approach diversity and inclusion as a ‘tick box’ exercise rather than a core business priority, with many still describing the culture within financial services as an “old boys’ club”. 

The inquiry noted that the overarching problem behind all of these issues is that of “impunity for perpetrators and culture”. The inquiry believes that, first and foremost, the responsibility for tackling these issues lies with senior leadership and boards of firms.

“No silver bullet” but a range of recommendations

Whilst recognising that change won’t happen overnight, the inquiry made a series of recommendations which it hopes will drive an improvement in culture and diversity and inclusion in financial services.  

A focus on the ‘right’ initiatives

The inquiry refers to the “flagship” initiatives by the government focused on gender equality as being the gender pay gap reporting regulations, and the HM Treasury’s Women in Finance Charter. Whilst it believes both have been successful at increasing transparency and driving conversations, neither has brought about the extent of change hoped for. The inquiry therefore recommends a number of enhancements to both regimes to increase their effectiveness, including extending the focus of the Charter beyond just top-level senior management, and requiring firms with pay or bonus gaps of a certain level to publish a narrative explaining the gap and produce action plans on how they will reduce them. 

Pay transparency

In a move which would set the UK on a similar trajectory to the EU and parts of the US, the inquiry also recommends the introduction of laws which would require salary bands to be included on job adverts and bans on employers asking about salary history during job applications. 

To further target the gender pay gap, it also recommends reducing the employee threshold for employers to publish annual gender pay gap statistics from 250 to 50 employees, at least for financial services, to bring some of the smallest firms with “the worst cultures and levels of diversity” within scope. 

Linkage to remuneration 

In addition, the inquiry recommends extending the scope of the Women in Finance Charter by making the link between gender diversity targets and executive pay a firmer commitment, rather than an intention, and on a ‘comply or explain’ basis. Whilst the inquiry acknowledges this is not widespread practice across the sector, it believes linking senior executive pay and bonuses to performance on diversity and inclusion can be an effective way to incentivise change.

Regulatory intervention 

The outcome of the inquiry may also inform the regulators’ response to their 2023 consultations on boosting diversity and inclusion across the sector (read more about these here). The far-reaching proposals for change published last September focus on a range of diversity strands, not just gender, and include the requirement for firms to collect, report and disclose diversity data, and set targets to address under-representation, raising interesting questions on the role of the regulator in driving the D&I agenda. 

Concerned that this might be treated as another ‘tick box’ compliance exercise, the inquiry recommends that the regulators drop the proposals for data reporting and target setting. Instead, they recommend all sizes of financial services firms sign up to the Women in Finance Charter, which it believes has helped signatories achieve higher senior female representation. 

Reporting wrongdoing

Continued scrutiny over the use of NDAs is unsurprising. It follows various high-profile examples of their use in cases involving sexual harassment as well as announcements from the government in 2021 that they would introduce legislation to crack down on them. As well as supporting that approach, the inquiry recommends that the regulator collects data on the extent of their use in financial services. 

The FCA has already taken steps towards this. In February 2024, it wrote to various regulated firms seeking statistics on non-financial misconduct, including whether the outcome involved entering into a non-disclosure agreement (read more here).

Facilitating whistleblowing in sexual harassment cases is also a priority within the inquiry. It recommends that the FCA raises awareness of its whistleblowing line, and it is supportive of future legislative change to strengthen protection for whistleblowers. 


Recognising the significant impact maternity and menopause can have on women at work, the inquiry makes several recommendations regarding firm policies, including equalising parental leave, increasing transparency over policies, and establishing menopause policies. 

Levelling opportunities for parental leave was also one of the takeaways highlighted by this year’s FTSE Women Leaders Review. Increasing the take up of parental leave by men can be pivotal to the career progression of women by helping to break down traditional gender roles. 

Next steps

Whilst these recommendations do not have to be accepted by government or the regulators, they may influence short- and medium-term policy making, particularly given the ongoing consultations and live reviews across many of the issues being addressed. 

With the introduction of a new duty on employers to take reasonable steps to prevent sexual harassment in the workplace – due to come into effect in October 2024 - we expect to see further coverage of these issues and scrutiny over the actions taken by firms to drive change.