Last week we flagged the discussion paper which has been published by the FCA, the PRA and Bank of England reporting how the FS sector is making good progress on diversity and inclusion but more needs to be done. – that’s ‘Diversity and inclusion in the financial sector – working together to drive change’. They say serious inequalities and lack of inclusion between different groups are present in society that they want to play a part in addressing the negative impact this has within financial services. They want firms to do more, more quickly, to improve diversity and inclusion within their own workforces. They point to the research which shows a strong correlation between diversity and inclusion and positive outcomes in risk management, good conduct, healthy working cultures, and innovation.
The paper contemplates the possibility of introducing new requirements on FS regulated firms to report diversity data and, with that in mind, they’re planning a ‘pilot data survey’. The aim is to understand levels of diversity within firms and to test firms’ ability to provide data. They say, for the pilot, firms wouldn’t be asked to approach staff for further information but would be asked voluntarily to supply aggregated and anonymised data they already hold. So, it’s clear they recognise that, going forward, data collection is going to be a challenge.
So let’s hear more about that. Kate Dodd is a D&I specialist and she joined me by video-link from Manchester to discuss the paper and, in particular, the collection of the data. I started by asking what she makes of the paper:
Kate Dodd: “I think it's really positive. It’s an interesting one, actually, because the FS sector have actually done absolutely huge amounts already on diversity and inclusion, much more than other sectors, and actually are quite sophisticated in their approach to D&I. That has largely been driven by gender, and the various reports and reviews that have been commissioned over the last few years into gender diversity in the FS sector. So, this is interesting because this is obviously much more wide reaching, it goes beyond protected characteristics and there is mention in there of things like social mobility, which obviously aren't covered by the Equality Act, but are things that people are really interested in and something that the FS sector does need to continue to concentrate on things, I said, like socio-economic diversity.”
Joe Glavina: “You have been working with clients on this area for a long time – clients who’ve been collecting diversity data on a voluntary basis – but for those employers new to this, what are the key issues to be alive to?”
Kate Dodd: “Yes, so there are probably three key things here. First thing is GDPR, of course, that is really important, we cannot simply gather data without letting people know that that's what we're doing. We can't gather that data, process it, all the rest of it, without having GDPR front of mind. There are two ways of looking at diversity data. One is where it's completely anonymous, so you cannot link it through to individuals, and the other way is where it can be linked through, although you do use that data in a way in which nobody can be identified. We are finding that clients don't find the first type of data very useful. If it is too far anonymized, if it's too divorced from the individuals that it is that it's in respect of, then it's not particularly useful and clients can't find much meaningful data there to actually pin down what is going on in their business and how to make changes and therefore the majority of our clients, we are seeing, are using that data that is caught under the GDPR. So, it is very important to have all of that, all of those things done that you need to do, such as, for example, the data protection impact assessments.”
Joe Glavina: “What about response rates Kate, because you need to have a good level of buy-in for this to be effective.”
Kate Dodd: “Yes, so the second thing that, of course, you need to do once you've got everything in place, and it's absolutely vital you get that right from the word go, you've got legal requirements there, of course to comply with, but we are seeing clients who are doing absolutely loads to make sure they've got everything in place and to make sure that they are totally compliant, and then they're finding themselves let down and frustrated by lack of response rates. Of course, that is because people are very aware of the power of data, people are very fatigued by their data being misused, these kind of text messages and phone calls which we still continue to get saying, oh, you've been in an accident, or somebody somehow has got your data and is ringing you up to try and sell you stuff and I think as a society we are pretty sick of that and we are very suspicious of people who want our data and, of course, that goes on in the workplace as well. So, I would advise all of our clients, and we're working with a number of clients at the moment on this exact thing which is, don't just get your ducks in a row. from a legal perspective, you need to be doing a hearts and mind campaign for a number of months before you even start this data collection to let people know it’s coming, and why, and to let them know the value to them of that data being taken in, to let them understand the benefits to them.”
Joe Glavina: “Many of our clients are multi-national businesses which must present a challenge, I imagine.”
Kate Dodd: “Yes, absolutely. The final thing to think about, of course, is the fact that if you are working across the globe, as so many of our clients are, if you have got any sort of international operation in which you want to understand your data, the law is different and it is significantly different depending on where in the world that you are. There are some places in which you are not even allowed to ask the most basic things, you are not allowed to record things like gender, for example. So do not assume that once you've got it right in the UK that you can apply the same rules across the globe. It is important to get the legal side of it right. Also, we have touched there on culture and the cultural side of this is huge. We have got lots of clients who have been very frustrated by the fact that in Northern Europe, very close to the UK, there are lots of jurisdictions for whom this stuff is anathema. They do not believe in asking these kinds of questions in the workplace, they think it's inappropriate and these kinds of things aren't even spoken about in the workplace and these are exactly the same kind of countries where there are barriers on other aspects of D&I, of course. So, things like talking about mental health in the workplace can still be considered a big taboo in places very close to the UK, places that we do business with all the time. So, we cannot expect other countries necessarily to be as advanced in terms of willingness to give up data and therefore we need to work harder with those countries, and also in a way that is respectful to them and respectful to their culture, so that they don't feel that this is just being foisted upon them.”
That discussion paper is called ‘Diversity and inclusion in the financial sector – working together to drive change’. If you’d like to download it for yourselves, you can – we have put a link to it in the transcript of this programme. Also, we covered the social mobility aspect of this paper last week in our mobility in FS firms has room for improvement’. That programme is available for viewing now from the Outlaw website.
- Link to discussion paper: ‘Diversity and inclusion in the financial sector – working together to drive change’.