Trans women should NOT be automatically counted as female, Financial Conduct Authority rules: Watchdog drops plans to force City firms to include men who self-identify as women in female diversity targets
- Hundreds complained to FCA over plans to include trans women in female quota
- Companies will now decide themselves on how to report female diversity levels
- Under new rules, at least 40 per cent of board members at firms must be female
Trans women should not be automatically registered as women in female diversity quotas, the financial watchdog has ruled.
Hundreds complained to the Financial Conduct Authority (FCA) over plans to make it compulsory to include ‘those self-identifying as women’ in female diversity targets for boards and senior management roles.
The move is part of the FCA’s wider ‘comply or explain’ push for diversity – which will also demand that at least one board member be from an ethnic minority.
Companies who fail to meet the requirements will be expected to ‘explain why not’.
But a strong backlash on the trans issue forced the regulator to stand down, ultimately giving UK-listed companies the ‘flexibility’ to decide how they report their female quotas, reports the Telegraph.
Campaigners praised the move, announced on Wednesday, saying the FCA did not have the right to ‘redefine what ‘man’ and ‘woman’ mean’.
Maya Forstater (pictured) from women’s rights group Sex Matters, welcomed the decision by the FCA to not force companies to include trans women in their female diversity quotas
Hundreds complained to the Financial Conduct Authority (FCA) over plans to make it compulsory to include ‘those self-identifying as women’ in female diversity targets for boards and senior management roles. (stock image)
Maya Forstater, an executive director of women’s rights campaign group Sex Matters, said: ‘The FCA was wise to allow companies to report straightforwardly on the proportion of male and female members of its board, in line with the Equality Act and the Companies Act, and not to start requiring them to ask board members to declare that they have one of many fluid ‘gender identities’.
‘It is not for the financial regulator to redefine what ‘man’ and ‘woman’ mean.’
The FCA itself, however, will continue to report its female quotas on a ‘self-identification basis.’
The Financial Conduct Authority (FCA) has brought in new diversity quotas which must be met by UK-listed companies, including one board member from an ethnic minority and at least one senior female board member.
At least 40 per cent of board members must also be female, and those who cannot meet the requirements must explain why.
The regulator said in a statement: ‘The FCA has finalised rules requiring listed companies to report information and disclose against targets on the representation of women and ethnic minorities on their boards and executive management, making it easier for investors to see the diversity of their senior leadership teams.
‘The FCA’s approach sets positive diversity targets for listed companies.
‘If they cannot meet them, they need to explain why not. This approach allows flexibility for smaller firms or those based overseas.
‘The rules also allow companies to decide how best to collect data from employees to show they are meeting the targets.
‘The rules will apply to listed companies for financial accounting periods starting from 1 April 2022.
‘The FCA will review the rules in 3 years’ time to make sure they are working and to check if the diversity targets are still appropriate.
‘This work reflects the FCA’s focus on speeding up the pace of change around diversity and inclusion in financial services.’
Sarah Pritchard, Executive Director of Markets at the FCA said:
‘As investors pay increasing attention to diversity at the top of the companies they invest in, enhancing transparency at Board and executive management level will help hold companies to account and drive further progress.’
It comes amid fierce debate over the issue of trans women in female spaces, such as hospital wards, and whether they should be allowed to compete in women’s sports.
Under new FCA requirements, at least 40 per cent of a company’s board of directors must be female, including at least one senior board member.
But following a consultation, the quotas will no longer be forced to include men who are ‘self-identifying as women’.
There were 540 responses from City firms, lobby groups and workers, with the overwhelming majority (439), addressing the trans issue – with all but one wanting the wording dropped.
Some argued that enforcing such a policy would clash with equalities legislation and could fail to recognise the under-representation of women based on sex.
Some also feared that ‘targets based on self-identified gender could lead to more men by sex on boards (to the extent that they identify as women), undermining the stated purpose of the proposals to improve diversity.’
The FCA said they ‘accept and agree with representations that companies would benefit from having greater flexibility’ on how they report data.
The body said it therefore decided against prescribing ‘specific terminology’ for how companies report their female quotas.
Companies will now be able to decide themselves whether they report based on sex or gender identity.
MailOnline has contacted the FCA for comment.
Under the updated Listing Rules, which came into force this month, diversity information must be included in a company’s annual report – meaning the first such reports will be filed mid-next year.
The requirement is aimed at increasing diversity in the typically male-dominated financial services industry – where only 34 per cent of board members at FTSE 350 companies are currently women.
It suggests a lot more women will need to be hired or promoted to reach the 40 per cent minimum.
The new rules also dictate that there be at least one board member from an ethnic minority background – with the term ‘non-white’ dropped from the guidelines for being ‘offensive’.
Sarah Pritchard, head of markets at FCA, said: ‘As investors pay increasing attention to diversity at the top of the companies they invest in, enhancing transparency at board and executive management level will help hold companies to account and drive further progress.’
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