Social class, sometimes referred to as the “forgotten dimension of diversity”, is coming under greater scrutiny, with a government-backed task force set up last year to boost socio-economic diversity in senior level positions at financial services firms, including banks, investment funds and law firms.
In its 2020/2021 Diversity Annual Report, the UK Financial Conduct Authority highlighted social mobility as being more important than ever, with societal inequalities exacerbated by the pandemic.
It is unsurprising then that the topic, which has largely been conspicuous for its absence in many firms' diversity and inclusion strategies, featured prominently on a recent panel discussion at FIA's IDX conference in London. Speakers agreed that more work needs to be done to boost socio-economic diversity to ensure talented people of all backgrounds are given the opportunity to succeed.
Paula Kemp, head of employer engagement at the UK's Social Mobility Commission, said that a combination of established cultures and natural biases in the financial sector mean people from working class backgrounds often find it harder to progress and may take longer to climb the ladder.
Pointing to research published in November by The Bridge Group, a non-profit consultancy that promotes social equality, Kemp said: "If you come from a lower socio-economic background, it takes 25% longer to progress in the financial services sector despite no evidence of poorer performance. This is because of internal barriers."
Pamela Jones, co-founder of Genesis Consultancy and chair of Women in Listed Derivatives London, added: "I have known many women over the last 25 years who have had impossible barriers put up against them because of their social class. And people don't want to talk about it, but it's real. This is people's lived experience."
The Bridge Group report, commissioned by the City of London Corporation which is leading the task force, found almost nine in ten senior roles in financial services are held by people from higher socio-economic backgrounds, as defined by an individual's highest-earning parent’s occupation when they were a teenager.
Just under half of senior roles were filled by white men who attended private or selective state schools, according to the research, which used data from eight large employers in the financial services sector, including three regulators.
The report also found that "middle class" attributes like "polish" and other subjective attributes aligning with higher social class were "at times conflated with perceptions of talent." Adding to the challenge were issues including "senior sponsorship, and opaque promotion and project allocation processes."
City minister John Glen said in the report that by “breaking down socio-economic barriers to progression, our financial services sector will become more innovative and competitive, and help to level up the UK”.
Kemp also discussed the Social Mobility Commission's findings that employees from a working-class background are paid an average of 11% less than their peers from a more privileged, professional background.
"If you add gender [and race] to that – if you are a woman from a working-class background, or if you are a black person from a working-class background – the pay gap is larger," she said.
The Social Mobility Commission is trying to address this by creating an Employers’ Toolkit, which provides practical recommendations to firms in financial services to ensure that talented individuals from lower socio-economic backgrounds are not overlooked.
There is some positive news though. According to Kemp, half of the companies who apply for the Social Mobility Employer Index are in the financial and professional services sectors.
The Index is a benchmarking initiative that ranks UK employers on the actions they are taking to ensure they are open to accessing and progressing talent from all backgrounds and showcases progress towards improving social mobility.
"Social mobility is definitely on the agenda," said Kemp. "Along with the task force we're starting to see questionnaires coming out from the Financial Conduct Authority about socio-economic diversity, so this topic is really starting to filter through now."
Read more about FIA's efforts to boost diversity and inclusion in the financial services industry, including conversations from industry events and first-person accounts of challenges and successes from leaders in the cleared derivatives industry.