The pay gap between male and female directors at FTSE-350 financial services firms is currently 66%, according to new research from employment law firm Fox and Partners.
The average pay for female directors at FTSE-350 financial services firms stands at £247,100 against the £722,300 pay for male directors, as “slow progress” has been made in promoting women to senior, higher-paid executive positions.
The figures suggest that while there is a “broad consensus” about the importance of increasing gender diversity in the financial services industry, this is yet to be reflected at the most senior level.
Fox and Partners found that 86% of these female directors were in non-executive roles, which tend to be lower paid compared to executive roles, and have less day-to-day responsibility. Only 15% of female directors are in executive roles.
It added that according to the research, companies are more willing to give women non-executive roles in order to improve board diversity, but are not appointing women to higher paid executive roles which would give them greater influence within the company.
While firms need to be aware that appointing women to NED roles is a “step in the right direction”, it only addresses “part of the problem”, according to the law firm.
It added that ensuring women are appointed to permanent senior executive positions will result in them having more influence at a senior, strategic level and will create a “greater long-term change”.
In addition, it warned that economic, social and governance (ESG) issues are increasingly high on the agenda for investors and gender diversity forms a significant part of that assessment, and companies that fall short of this “will start to feel the impact”.
It also warned that there is risk of sex discrimination and equal pay claims that attaches to “significant” pay disparity and lack of diversity in senior positions, as well as the potential reputational risk of an apparent systemic issue with gender diversity at the top.
Catriona Watt, partner at Fox and Partners, said: “Despite having greater levels of diversity at more junior levels, financial services firms are still struggling to reflect that shift at the senior executive level.
“In order to see long term change, firms must be committed to taking steps that will lead to more women progressing through the ranks, getting into senior executive positions and closing the pay gap. Boards need to be open to challenging themselves by asking honest questions about the barriers in their organisation that might prevent women reaching the very top.”