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The UK government should ban the use of non-disclosure agreements in sexual harassment cases, according to an investigation by an influential committee of MPs, which found a “shocking” prevalence of misconduct in the financial services sector.
The House of Commons Treasury Committee said its investigation into sex discrimination in the industry found that non-disclosure agreements were still being “misused” by employers to “cover up” allegations of mistreatment, harassment and discrimination.
Nondisclosure agreements are legal contracts that prevent their signatories from disclosing specific information. Contracts are widely used to maintain trade secrets, but have also been widely deployed by employers to protect their reputations by preventing employees from discussing instances of workplace misconduct.
The committee said the practice, which has come under scrutiny after high-profile cases in the MeToo movement, such as that of Hollywood film producer Harvey Weinstein, leaves “victims silenced while perpetrators go unpunished.”
Concerns about sexism in the City of London were highlighted last year when the Financial Times published several allegations by women of sexual assault and harassment by hedge fund manager Crispin Oddie. Audi's lawyers said last year that he “strongly opposed” the charges against him.
Aviva chief executive Amanda Blanc, who gave evidence to the committee, was subjected to sexist comments by shareholders at the FTSE 100 insurers' annual meeting in 2022.
MPs also found that many companies do not have adequate whistle-blowing procedures for employees who seek to raise concerns, “with HR teams prioritizing company reputation over employee wellbeing”.
They cited evidence from the charity Safeguarding that 70 per cent of whistleblowers in the financial services sector had been sacked, victimized or felt resigning was their only option.
The representatives called for the enactment of new legislation to enhance the protection of whistleblowers in sexual harassment cases.
The committee found that there had been improvements in gender equality in the City of London since it last examined the issue in 2018, but said progress had been “very slow”.
Harriet Baldwin, the Conservative MP and chair of the Treasury Committee, said efforts to tackle sexism in the city were “moving slowly”.
The disparity in average pay between men and women working in financial services has narrowed slightly since 2017, but remains wider than in other sectors, the committee said. He added that there had been only “incremental improvements” in the proportion of women holding senior positions in financial services.
The committee made several recommendations to combat inequality in the sector, including a new legal requirement for employers to disclose salary ranges in job advertisements, and banning companies from asking candidates about their salary history.
MPs also proposed expanding reporting requirements for gender pay gaps to companies with more than 50 employees, which is more stringent than the current limit of 250 people.
However, the FCA and Prudential Regulation Authority should drop plans for new requirements for financial firms to report their diversity data and set targets for improvement.
“These proposals would not include many small businesses that have some of the worst cultures and levels of diversity and could be treated by businesses as another practice,” the committee said.
The FRA said that its proposals would benefit companies and employees, and that it would consider the committee’s recommendations on whistleblowing and the use of non-disclosure agreements. She added that she would “prioritize proposals that raise expectations for companies to tackle misconduct such as bullying and sexual harassment.”
The government did not immediately respond to a request for comment.
