UK financial services companies will face legal requirements to set targets for the number of women on boards for the first time from next year as the result of the EU’s new Capital Requirements Directive IV (CRD IV), according to law firm Pinsent Masons report Harris & Co chartered accountants Northampton who specialise in accountancy services for small and medium sized businesses.
The firm says provisions contained in CRD IV introduce a regulatory requirement for large banks, building societies and investment firms with nominations committees to set targets for the number of women on boards.
It says these legal requirements have been reflected in the recent consultation papers published by the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) and are due to come into effect on 1 January 2014.
Consultation on changes to regulations to match the CRD IV proposals closes on 2 October 2013. If approved, the new rules would be included in the Senior Management arrangements, Systems and Controls sourcebook (SYSC), part of the FCA handbook.
The financial institutions covered by the requirements will also be obliged to publish a policy relating to how that target will be achieved and potentially report on progress.
In addition to the gender targets, which only apply to larger institutions, all financial institutions regulated by the PRA and FCA will be required to publish a diversity policy which sets out how they propose to promote diversity in the boardroom.
Linda Jones, an employment partner at Pinsent Masons, said:
‘The regulations will not prescribe what the targets should be, but they will have to be published and businesses will no doubt be wary of publishing targets that seem too lacking in ambition. While the requirement only applies to financial institutions at the moment, it may be a taste of things to come for other large businesses.’
In another challenge to workplace equality, a study released by Chartered Management Institute (CMI), shows that male bosses are being paid bonuses double the size of those given to female colleagues in identical jobs, and suggests this means men gain £141,500 more than women over the course of a working lifetime.
CMI’s figures show men in UK management roles earned average bonuses of £6,442 last year, compared with £3,029 for women. In the most senior roles, female directors received bonuses of £36,270 over the past 12 months, compared with £63,700 awarded to male directors.