Women in Top Finance Jobs Would Reduce `Group Think,' U.K. Lawmakers Say

Increasing the number of women on the boards of U.K. financial institutions would reduce "group think" and improve scrutiny of executive decisions, a panel of lawmakers said.

While it is "going too far" to say the financial crisis would not have happened if there were more women at senior levels, boards would function more effectively if they had greater female representation, the cross-party Treasury Committee said in a report published today.

"Our work on the banking crisis highlighted the need for substantial improvement in corporate governance in the City and diversity at the top is one way to challenge potentially dangerous group think," committee chairman John McFall said in an e-mailed statement. "The onus is on the City to demonstrate that it is committed to improving the representation of women at senior levels."

The lawmakers said they were disappointed that companies in the City of London, Britain's finance hub, have not been more successful in introducing flexible working for senior staff and tackling pay inequality throughout their organizations. Pressure for a quota system will increase unless firms take action to boost female representation, the report said.

"While it is impossible to know whether more female board members would have lessened the impact of the financial crisis, the arguments for fairness, improved corporate governance, a stronger challenge function and not wasting a large proportion of talent seem more than sufficient to conclude that increased gender diversity is desirable," the report said.

Charles Goodhart, a former Bank of England policy maker, told the committee at a hearing on Oct. 14 that the crisis would have been less likely if there were more women at a senior level.

"The longer-term, more cautious tendency with less of the alpha male would be highly beneficial," Goodhart told the panel.

To contact the reporter on this story: Thomas Penny in London at tpenny@bloomberg.net;