Finance companies to get female board quotas

Jo Faragher

Major employers in the UK’s financial sector could be forced to implement quotas for women on boards under plans being devised by regulators.

The move is to satisfy a new EU directive, and will require that ‘large financial firms’ form a nomination committee to select the board of directors and ‘decide on a target for the representation of the underrepresented gender on the management body and how to meet it’.

The quotas will be set internally and apply to the largest financial institutions, but all companies in the financial sector will be obligated to outline a comprehensive diversity strategy regarding boardroom appointments.

The regulators are running a consultation on how to implement the new rules, known as CRD IV.

The plans could affect up to 2,400 banks, building societies and investment companies that are regulated by the Financial Conduct Authority (formerly the FSA) and the Prudential Regulation Authority, which oversees financial services companies.

Earlier this year, a report by Cranfield School of Management into women in FTSE-listed companies revealed that after a short period of growth in women in senior roles, progress had stalled.

The UK government opposed EU plans to bring in compulsory quotas for women on boards at the end of last year, which were then revised to an voluntary code for member states to ensure 40% of large, listed company directors are female by 2020.