Ministers have called for an end to the ‘era of impunity’ among City employers, with a new report claiming sexual harassment and bullying is still shockingly prevalent.
The Treasury Committee’s Sexism in the City inquiry, launched last summer, wants a ban on the use of non-disclosure agreements (NDAs) and stronger protections for whistleblowers.
The inquiry has now published its findings along with a number of recommendations as to how sexism and misogyny in the sector can be addressed.
Alongside a suggested ban on the use of NDAs in sexual harassment cases, it recommends a ban on prospective employers asking for salary history, a legal requirement to include salary bands on job adverts, and expanding gender pay gap reporting legislation to cover firms with 50 employees or more (it is currently 250 employees or more).
The inquiry found that NDAs were often “misused” in the sector to cover up abuse, sexual harassment and discrimination, “leaving victims slienced while perpetrators go unpunished”.
Sexism in the City
Sexism in the City: FCA to review harassment and misconduct
The Committee also heard that internal whistleblowing procedures were often inadequate, with HR teams prioritising the reputation of the business over the wellbeing of employees.
MPs found evidence that 70% of whistleblowers in financial services were victimised, dismissed, or felt resigning was their only option – hence their call for stronger protections for those reporting concerning behaviour.
In addition, the Committee recommended that businesses with wide gender pay gaps should explain the disparity and publish an action plan – something that is recommended but not enforced in gender pay gap reporting rules.
A further recommendation is that regulators drop plans to require firms to report data and set targets on diversity.
The Committee said: “These proposals would not capture the many smaller firms that have some of the worst cultures and levels of diversity and could be treated by firms as another ‘tick-box’ exercise.
“The Committee is of the view that boards and senior leadership of firms should take greater responsibility for improving diversity and inclusion given the clear business benefits this would bring.”
Chair of the Treasury Committee, Harriett Baldwin, said that the UK financial services sector was the “crown jewel” of the economy, and took pride in being ahead of the curve.
“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’s so frustrating that efforts to tackle sexism in the city are moving at a snail’s pace.
“Firms must take responsibility for improving their culture. There have been several high-profile cases which show the existential risk to firms who don’t tackle sexual misconduct. We also know that more diverse organisations perform better, so inaction is not only immoral but bad for growth and business.
“Regulators and the government also have a role to play but they need to think carefully about what will deliver the best outcomes and avoid introducing tick-box exercises.”
Mark Freed, CEO of Men for Inclusion, said the most critical recommendation of the report was its advice to treat diversity and inclusion programmes as they would any other core business priority.
“Too often, efforts to date have felt like a small cohort of passionate people trying to drive change from the side of their desk.
“Tackling sexual harassment requires a collective effort, involving men as allies and role models. It’s not just about post-event measures; we need proactive steps to empower colleagues to develop the moral courage to intervene and prevent such behaviour. By fostering a culture of accountability and support, we can create safer and more inclusive workplaces for everyone.”
Daniel Stander, an employment lawyer at Vedder Price, said employers should prepare for prospective legislation placing a ban on the use of NDAs in certain circumstances, pointing to the recent ‘warning notice’ issued by the Solicitors Regulation Authority on their misuse.
He said: “A 2023 report by the SRA concluded that practitioners should proactively consider whether an NDA is appropriate or necessary in each case, taking into account the facts and the individual involved.
“That said, with the pace of change being attacked under the new Treasury Committee report, employers should prepare for the law to develop to restrict the ability to make reputation-busting and uncomfortable complaints go away.
“Even with large payouts, there is no guarantee that they can be kept confidential any longer and instead employers are recommended to redouble efforts to improve their culture, in particular with an eye towards the new statutory duty on employers to take reasonable steps to prevent sexual harassment of their employees in the workplace, effective from 26 October 2024.”
In January, regulator the Financial Conduct Authority said it was launching a review into how investment banks and commercial insurers deal with sexual harassment, with findings due to be published later this year.
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