The CEO of the City watchdog, who joined the FCA in October last year and was previously a senior executive at the London Stock Exchange, did not specify how gender diversity would be integrated into the senior managers’ regime during his 17 March virtual talk but noted similar moves in the US.

“We also need to look hard at the way capital markets work,” Rathi added in his speech. “In the US, we have seen the Nasdaq take the lead with its listing rules, which will require all companies listed on its US exchange to have, or explain why they do not have, at least two diverse directors.”

“As part of our regulatory work on diversity and inclusion and the listings framework, we will be exploring whether we should make similar requirements part of our premium listing rules.”

Rathi did, however, say that the regulator would be considering “how best to use our powers” over the next year if progress is still slow on diversity at senior levels. This work would be led by Georgina Philippou, senior adviser on the public sector equality duty and former chief operating officer of the regulator.

While Britain’s finance watchdog has been a vocal proponent of diversity and inclusion among the thousands of firms it regulates, its own record is somewhat wanting. FN reported that six times more men (43) than women applied to replace Andrew Bailey as the head of the Financial Conduct Authority.

The FCA’s senior managers and certification regime, under which the senior managers’ regime falls, makes senior executives more accountable for wrongdoing.

Under the SMCR regime, firms are required to certify that senior managers and individuals are “fit and proper”. It has applied to UK banks from March 2016 to insurers from December 2018 and to solo-regulated firms, such as asset managers, from December 2019.

The fourth annual review of the Women in Finance Charter, which was launched in 2016, found that 44 firms missed their 2020 targets, more than the 37 who did meet their goals. Of those who fell short, 13 of them said that the pandemic hampered their progress when it comes to recruitment and promotions.

The FCA missed its target of 45% female representation in senior management by 2020, according to the review. In a comment to the authors, the regulator said: “When it signed the Charter, the Financial Conduct Authority set challenging targets for both gender and ethnicity.”

“It hit its ethnicity target, but missed its interim target of 45% for female representation due to low turnover in senior management,” the regulator said, adding that it has a new target of 50% by 2025.

“As an employer, we are determined to improve our own diversity and to work on our culture to ensure it is inclusive,” Rathi added in his speech.

“As a regulator, we want the same from the firms we oversee and in the markets we regulate. Not because it is a social good – although, frankly, that should be enough. We care because diversity reduces conduct risk and those firms that fail to reflect society run the risk of poorly serving diverse communities. And, at that point, diversity and inclusion become regulatory issues.”

The Charter is the government’s flagship initiative for tackling the lack of gender diversity in the City. More than 400 institutions have now signed up, totalling almost a million employees between them.

When firms become a signatory, they pledge to promote gender diversity by having one member of the senior executive team who is responsible and accountable for gender diversity and inclusion. Charter signatories also agree to set internal targets for gender diversity in senior management, among other goals.