Big financial companies will have to establish a target for the number of women sitting on their boards from 2014 under the European Union’s incoming Capital Requirements Directive IV.
The CRD IV rules, which will apply to most large financial firms including investment groups and the big banks, also demand they explain their plans for reaching the target.
The Financial Conduct Authority and Prudential Regulation Authority’s consultation papers into the directive says firms will have to form a nomination committee to help select the board of directors, then set out a “target for the representation of the underrepresented gender on the management body and how to meet it”.
Pinsent Masons lawyer Linda Jones told the BBC that the move represents the first time UK businesses will face a regulatory requirement to set gender targets for their senior management teams.
“These proposals, which emanate from an EU directive, represent a step change for financial institutions,” she says. “If the regulations are seen to be helpful in financial services, it would seem only to be a matter of time before they are rolled out to other sectors.”
However, Newton Investment Management chief executive Helena Morrissey told the broadcaster that the new rules are not necessary as some parts of the industry are already moving towards its aims.
“The UK is already making strong progress and to some extent any regulatory measures emanating from EU might seem academic as large banks already have stated targets,” she says.
“Our belief is that, as more women join boards without the imposition of quotas, the more they can demonstrate the value they can add.”