In March 2022, the Central Bank of Ireland (Central Bank) published its Sixth Annual Central Bank Demographic Analysis Report (Report). The Report analyses the diversity levels of persons seeking approval, and approved, to act in senior management or board level roles within regulated firms as of 31 December 2021. A key finding of the Report is increased gender diversity at senior levels within the regulated financial services sector. Despite this increase, the current diversity level remains insufficient. The Report examines applications to hold certain senior roles within regulated firms requiring Central Bank approval under its Fitness & Probity Regime.
The Central Bank received over 3,500 applications for Pre-Approval Control Function (PCF) roles in 2021. The Report considers these applications for regulatory approval based on gender, age and nationality. While the Report focuses primarily on 2021, it also analyses the last ten years of applications since the Fitness and Probity Regime took effect in 2012.
- Whilst progress has been made year-on-year in improving gender diversity, it is slow. Female representation in applications for PCF roles in 2021 stood at 31%, compared with 16% in 2012.
- In the context of a continuing gender imbalance at board level across all sectors, the 2021 report has shown improvements. Female representation for these positions increased by 6% from 22% in 2020 up to 28% in 2021.
- Male applicants continue to dominate revenue-generating roles. In 2021, females accounted for less than one-sixth of applicants of incumbent role holders responsible for driving business revenue. Male applications (84%) continue to dominate these roles.
- Existing regulated firms continue to show higher levels of gender diversity than new firms seeking authorisation.
In the foreword to the Report, Derville Rowland, Director General, Financial Conduct, cautions
“hilst it is encouraging to see progress, it has been incremental over a decade, and firms simply must speed up. We remain of the view that a lack of diversity at senior management and board level is a leading indicator of heightened behaviour and culture risks.”
Considering the Report’s findings, this will continue to be an area of focus for the Central Bank. The Central Bank wants the firms that it regulates to be sufficiently diverse to ”prevent groupthink, guard against overconfidence, promote internal challenge and to act in the best interests of consumers”. Further follow up and review is to be expected. To ensure that firms do not fall behind in this regard, diversity must be considered as part of the PCF appointment process.
Contributed by Frank Hanly & Joan McCarthy