The UK government should ban the use of non-disclosure agreements in sexual harassment cases, according to a probe by an influential committee of MPs that found a “shocking” prevalence of misconduct in the financial services sector.
The House of Commons Treasury select committee said its in the industry had heard that NDAs were still being “misused” by employers to “cover up” allegations of abuse, harassment and discrimination.
NDAs are legal contracts that prohibit signatories from disclosing specified information. The contracts are widely used to preserve commercial secrets but have also been deployed extensively by employers to protect their reputations by stopping staff from discussing cases of workplace misconduct.
The practice, which came under scrutiny after high-profile MeToo cases such as that of Hollywood film producer , leaves “victims silenced while perpetrators go unpunished”, the committee said.
Concerns over sexism in the City of London were highlighted last year when the Financial Times multiple allegations by women of sexual assault and harassment by hedge fund manager Crispin Odey. Lawyers for Odey said last year that he “strenuously disputed” the allegations against him.
Aviva chief executive Amanda Blanc, who gave evidence to the committee, was subjected to by shareholders at the FTSE 100 insurer’s annual meeting in 2022.
The MPs also found that many firms have inadequate whistleblowing procedures for employees seeking to raise concerns, “with HR teams prioritising the reputation of the business over the wellbeing of employees”.
They cited evidence from the charity Protect that 70 per cent of whistleblowers in the financial services sector were dismissed, victimised or felt that resignation was their only option.
The MPs called for new legislation to strengthen protections for whistleblowers in sexual harassment cases.
The committee found there had been improvements in gender equality in the City of London since it last examined the issue in 2018 but said that progress was “far too slow”.
Harriett Baldwin, Conservative MP and Treasury committee’s chair, said efforts to tackle sexism in the City were “moving at a snail’s pace”.
The disparity in working in financial services had narrowed slightly since 2017 but remained wider than in other sectors, the committee said. There had been “only incremental improvements” in the proportion of women holding senior financial services roles, it added.
The committee made several recommendations for combating inequality in the sector, including a new legal requirement for employers to disclose salary bands on job adverts, and prohibiting companies from asking candidates about their salary history.
The MPs also proposed widening requirements on reporting gender pay gaps to include companies with more than 50 employees, more strict than the current 250-person threshold.
However, the Financial Conduct Authority and Prudential Regulation Authority watchdogs should drop plans for new requirements for financial firms to report on their diversity data and set targets to improve.
“These proposals would not capture the many smaller firms that have some of the worst cultures and levels of diversity and could be treated by firms as another ‘tick-box’ exercise,” the committee said.
The FCA said its proposals would benefit companies and employees and that it would consider the committee’s recommendations on whistleblowing and the use of NDAs. It added it would “prioritise proposals that tighten expectations on firms to tackle misconduct such as bullying and sexual harassment”.
The Treasury said figures from the voluntary Women in Finance Charter showed improved representation. “Discrimination and harassment will not be tolerated, and the sector must stamp it out,” it added.
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