Gender quotas in financial services?

Banks, insurance firms and other financial services firms could see gender quotas implemented in a bid to increase the number of women they employ at the top level of their business, according to proposals outlined by City regulators.

The Prudential Regulation Authority (PRA), which deals with the majority of large financial services organisations, included the proposal as part of an extensive consultation on implementing an EU directive.

While there has been much discussion over how diversity can be improved in the industry, many executives remain resistant to the concepts of quotas, which they feel are counter-productive and unlikely to produce lasting cultural change.

The PRA said firms and their nomination committees should "put in place a policy promoting diversity on the management body" and produce a target to aim for, reports the Guardian.

Linda Jones, an employment partner at Pinsent Masons, told the newspaper this would be the first time a mandatory gender requirement was set by regulators in the UK if it goes ahead.

While top banks and insurance companies are already supposed to be meeting voluntary quotas set out by Lord Davies for 25 per cent of a board of directors to be female by 2015, this shift means they could face sanctions for not complying with the EU-driven targets.

"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," added Ms Jones.

According to the employment partner, this could be a taster for what is likely to happen to many large businesses across the UK as the EU and the government step up their demands on diversity.

Diverse boards have consistently been shown to perform better than their male-heavy counterparts, suggesting there is a business case for improving this metric rather than simply an ethical one.