• Voluntary step part of government review of women in finance
  • Lloyds, HSBC, RBS and Threadneedle sign up to Treasury charter

U.K. financial firms should link bonuses to their own internal targets to increase female representation in senior roles and publish annual reports on progress, according to a government-commissioned review of gender diversity that stopped short of calling for mandatory goals.

The proposals in the study, led by Virgin Money Holdings U.K. Plc Chief Executive Officer Jayne-Anne Gadhia, will form part of a voluntary charter for firms, the government said in a statement Tuesday. Lenders including Lloyds Banking Group Plc, HSBC Holdings Plc and Royal Bank of Scotland Group Plc, as well as asset manager Columbia Threadneedle Investments, have signed up to the agreement.

The Virgin Money CEO is building on the work of successive government-backed reviews to increase female participation at the top levels of British corporate life, such as a 2011 study by former Standard Chartered Plc Chairman Mervyn Davies that called for at least 25 percent of FTSE 100 board positions to be held by women. The Gadhia review found women made up only 14 percent of executive committees in financial services last year.

Women Leaving

“Too few women get to the top and there is ‘permafrost’ in the mid-tier where women do not progress,” Gadhia said in a statement. “Women are leaving because the culture isn’t right. These proposals taken as a whole have the potential to make a real difference.”

Linking bonuses to progress on internal plans will “focus the minds of all senior executives,” Gadhia said. While her report considered the imposition of quotas for women in senior finance industry posts, Gadhia decided against them and said there is no “magic bullet” to help improve female numbers at the top of companies because firms vary in size and by organizational structure. Gadhia was also keen to “avoid a heavy handed approach,” she said. 

“I am delighted to accept her recommendations in full,” Treasury Minister Harriet Baldwin said in a statement. “Removing the barriers which prevent women from fully realizing their potential in the labor market is a crucial part of improving the U.K.’s long-term economic performance.”

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