Huw Jones

LONDON (Reuters), – Britain’s financial watchdog, the Financial Ombudsman of Britain, will publish within a year requirements to increase ethnic diversity in employees in finance using targets and no quotas. This was according to one adviser.

A discussion paper was published by the Financial Conduct Authority, Bank of England, and Finance Ministry last July. It outlines how diversity can be increased in Britain’s most important economic sectors.

The study suggested that high-ranking managers may be paid according to their contributions in diversifying the workforce.

Senior advisor at the FCA Georgina Phillipou said that there will be public consultations in the second quarter with the final requirements being made at the close of the year, or the start of 2023.

We never talk about quotas. To me quotas suggest numbers that have to be filled come what may, a box that needs to be ticked,” Philippou told a City & Financial conference on diversity in financial services.

Targets can be less aspirational, take more time to fulfill and are therefore harder to achieve. Quotas on the other hand must be met.

Philippou hopes that the Women in Finance Project to increase gender diversity will yield faster results than this year’s drive to improve race and ethnic diversity.

John Glen, Britain’s minister of financial services, urged banks to hire a top executive responsible for ethnic diversity to help them set goals.

The British Commission on Race and Ethnic Disparities recommended that employers report any pay disparities among ethnic groups to the Commission.

Glen explained that government had completed a test to better understand how complex it is to report such data. Government was now evaluating the next steps.

Glen said that “we will be very clear on what we want and why it is important, as well as how it will be executed in a fair-and reasonable manner.”

The importance of data-driven decisions is crucial. Glen said that measuring something can lead to something being done.

Diana Noble, chair of the Bank of England’s review of ethnic diversity and integration, was asked whether the diversity push would lead to a zero sum game’ – in which one group’s gain can be countered by another’s loss. This is essentially “white men missing it”.

Noble stated that there is an entire BoE community who has had less chance over the last 5-10 years. This needs to be rectified over the next few decades through targets, and not quotas.

They will also benefit from the effort. Noble stated that he believes it is better to communicate clearly and honestly about difficult issues when communicating such messages.