Central Bank releases gender breakdown of applications for regulatory approval for the most senior roles in regulated financial services firms

Since 2012, 80% of the applications¹ for approval for these senior roles are for men;
The Central Bank is concerned regarding the continued evidence of a lack of diversity at the most senior levels of regulated firms.

Today, for the first time, the Central Bank has published data on the gender breakdown of fitness and probity² applications for approval to occupy senior roles³ within regulated financial service providers (RFSP).

Over 17,800⁴ applications have been received by the Central Bank for pre-approval for senior roles in regulated firms in the last five years. Male applicants made up 80% of applications for senior roles since 2012, with a high of 84% male applicants in 2012 decreasing to 78% of male applicants in 2016.

The data has been analysed by sector of applicant, with male applicants making up:

• 82% of applicants in the insurance sector;
• 82% of applicants in the asset management sector⁵;
• 80% of applicants in the securities and markets sector⁶;
• 80% of applicants in the banking sector;
• 78% of applicants in the consumer sector⁷; and
• 71% of applicants in the credit union sector.

Further, outside of the credit union sector, this imbalance is even more pronounced at the most senior levels and in revenue generating roles rather than in control functions (such as compliance and audit). At the board level, women comprised just:

• 16% of applicants overall;
• 12% of applicants for chief executive roles;
• 12% of applicants for chairman of the board roles;
• 15% of applicants for executive director roles; and
• 18% of applicants for non-executive director roles

Ed Sibley, Director of Credit Institutions Supervision said:

“There is a strong body of research, including research undertaken by Central Bank staff, that a lack of diversity⁸ increases the risks of groupthink, poor decision-making and cultural issues in firms, in turn increasing the risks of poor consumer protection outcomes and financial stability issues. While only one aspect of diversity, the research published today shows that insufficient progress has been made to mitigate these risks.

The Central Bank has also recently reviewed a sample of the diversity policies across different regulated firms. Many show a lack of ambition and appear to have just been written to meet the minimum regulatory or statutory requirements that the firms have a policy.

The evident lack of diversity, including beyond gender, at the most senior levels across the financial services industry in Ireland needs to be addressed, to help to continue to improve decision-making, internal challenge, governance and culture.

I do recognise that there is evidence of good practice, indicating that a small number of firms are addressing diversity and inclusion in a serious and meaningful way. Examples of this include diversity policies for board and senior level roles that set out ambitious targets and a credible plan and timeline for achieving greater diversity, evidence that these targets, and the effective implementation of these plans, are reviewed and monitored and have clear senior level sponsorship and ownership.

We will continue to enhance our engagement and challenge on this important issue and expect to see greater progress and commitment from all regulated firms.”

Read the full report.

Notes

Ed Sibley is the Chair of the Central Bank’s Diversity and Inclusion Steering Group.
The data released today focuses on gender. This is only one aspect of what we mean when we say diversity, which in this case can also refer to ethnicity, background, education, religious belief and many other factors.

The fitness and probity regime was introduced in December 2011. It is an important tool used by the Central Bank to fulfil its mandate of protecting consumers and safeguarding stability. The regime was significantly strengthened after the financial crisis, with firms required to have individuals pre-approved for senior level roles.

The Central Bank believes that the data published today is the first time such data has been published by a regulatory body.
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¹ Where the word application or applicant is used, it is referring to applications to the Central Bank for pre-approval of individuals who have been offered senior level roles, it is not a reference to the number of applications financial firms received for roles. The applications received by the Central Bank for pre-approval, are where the individual has been offered the roles, contingent on approval from the Central Bank.
² The Central Bank of Ireland Fitness and Probity Standards provide that an individual performing a PCF or CF is required to, inter alia, be: competent and capable; honest, ethical and to act with integrity; and financially sound.
³ There are 46 Pre-Approval Controlled Function (PCF) to RFSPs (other than Credit Unions), covering both board and management level appointees. The Fitness and Probity regime also prescribes 2 specific Credit Union PCF (CUPCF) roles.
⁴ Applications may be for more than one role (e.g. chief executive officer & executive director), hence the data covers 20,922 role holders.
⁵ For the purposes of this report Asset Management refers to Investment Firms and Fund Service Providers.
⁶ For the purposes of this report Securities and Markets refers to Investment Funds.
⁷ For the purposes of this report Consumer refers to Bureaux de Change, Credit Servicing Firms, Debt Management Firms, E-Money Institutions, Insurance Intermediaries, Investment Intermediaries, Mortgage Intermediaries, Mortgage Credit Intermediaries, Moneylenders, Payment Institutions and Retail Credit Firms/Home Reversion Firms.
⁸ While the data released today focuses on gender. This is only one aspect of diversity. When we refer to diversity we also mean inter alia ethnicity, background, education, religious belief, etc.