CEO’s introduction
By providing fair and timely resolutions to disputes, the Financial Ombudsman Service plays an essential role to consumers and – as part of a wider ‘regulatory ecosystem’ – helps underpin confidence in financial services.
Reflecting the communities we serve, helps us provide the best service to our customers. That’s why we’ve been working towards ambitious diversity, inclusion and wellbeing (DIW) targets since 2016 and reporting pay gap and representation data since 2017.
In 2020, we introduced a new Diversity, Inclusion and Wellbeing Strategy to take us to 2023. That strategy has helped the Financial Ombudsman to become a more inclusive, more diverse workplace and to make progress on closing our gender and ethnicity pay gaps.
Since I joined the Financial Ombudsman Service last October, I’ve been especially impressed by the way our employee networks push forward progress in critical areas like ethnicity, disability, gender, mental wellbeing and more. I’ve enjoyed attending the events and activities they host. It’s one of the many things that makes this such a great place to work.
I’ve also been delighted that we’ve had so many opportunities to work with partner organisations and that the work we’ve done so far has been recognised.
We’re pleased with our progress, but still have some way to go. We’re currently formulating a strategy to take us to 2026, based on the data we’ve been measuring for the last six years.
This report highlights our successes in 2022, while also shedding light on what we haven’t achieved, and the action we plan to take to keep our targets on course.
Abby Thomas
Chief Executive and Chief Ombudsman
February 2023
Our people
2,478
employees
55%
women
36%
ethnic minorities
Gender
46%
of our Board and Executive Team are women
42%
of our senior managers are women
49%
of our Ombudsman panel are women
Ethnicity
46%
of our Board and Executive Team are ethnic minorities
16%
of our senior managers are ethnic minorities
16%
of our Ombudsman Panel are ethnic minorities
(Data from December 2022)
Representation
Most of our employees (55%) identified as female in 2022 and ethnic minority colleagues made up 36% of staff. Among those from ethnic minority groups, 65% were women and 35% were men. Our workforce is more diverse among junior colleagues.
Better representation of all groups across the organisation – and increased understanding of our talent pipeline – helps us to:
- retain diverse talent and improve promotion rates
- maintain a representative board and senior management team for the long term
From looking at the data, we know that length of service impacts on both pay and representation. So, to encourage our existing staff to stay at the Financial Ombudsman, we:
- monitor where and why we may be losing talent
- obtain feedback through our annual staff engagement survey
- gain insights from our leaver surveys and exit interviews
- train our managers to manage people effectively and understand their differences
We’re also seeking to better understand what makes some employees stay with us, so we can build on what we’re doing right.
High attrition rates among our ethnic minority employees, particularly, have a negative impact on representation. To address this, we’re currently reviewing our recruitment processes, including how we advertise vacancies.
We’re working to attract more diverse talent to roles that aren’t traditionally associated with certain groups, such as women to tech roles.
Senior staff and management
As signatories to HM Treasury’s Women in Finance Charter, we’re committed to supporting the progression of women into senior roles by focusing on the executive pipeline and the mid-tier level.
We have low attrition in our middle manager population, where there are more male than female employees. But we’re starting to see more movement at senior manager level where we had a higher percentage of women (42%) last year.
Among our senior managers, 16% came from ethnic minority groups – a slight rise from 15% last year, but still short of the ambitious stretch target that we’ve set ourselves of 20%. To help us reach this target within the next few years, in 2022 we:
- renewed our commitment as a signatory to the Race at Work Charter and,
- launched our Diversifying Leadership programme.
Going forward, we’re looking at several other strategies and interventions to build on our work in this area, including reviewing our recruitment practice, and introducing mentoring and sponsorship schemes.
Among our Ombudsman Panel 16% of are from ethnic minority groups, rising from 15% last year and 6% in 2017.
Of those on our Board and Executive Team, 46% are from ethnic minority groups and 15% consider themselves to be disabled or have a long-term condition.
Female representation on our board and executive teams, and in our senior manager population, dipped in 2022. It was still higher however, at 46%, than the average across the FTSE 250 of 36.8%. More recently, several new appointments go some way to redressing the balance, and bringing us nearer to meeting our target of 50% by December 2023.
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We take our representation and pay gap snapshots at different times of the year. Our representation snapshot is taken on 7 December every year while pay gap data is taken on 5 April.
We have kept to the same dates for each so that we can make an accurate comparison with previous years and, therefore, capture a true picture of how we're progressing.
The ethnicity representation data only includes staff who’ve chosen to report their ethnic group. Colleagues are not obliged to state their ethnicity. They have the option of choosing ‘other’ and ‘prefer not to say’.
Full representation data can be found in our data sheet, which also covers gender, age, gender identity, ethnicity, sexual orientation, disability and religion.
All the percentages in our representation data have been rounded to the nearest whole number, which means the figures might not add up to exactly 100%.
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Our gender balance in December 2022, compared with December 2021
Position Female Male 2022 2021 2022 2021 Our board and executive teams 46% 57% 54% 43% Our senior managers 42% 46% 58% 54% Both groups together 41% 47% 58% 53% -
Our ethnicity representation in December 2022, compared with December 2021
Position White Ethnic Minority 2022 2021 2022 2021 Our board and executive teams 46% 43% 46% 29% Our senior managers 81% 82% 16% 15% Both groups together 76% 77% 21% 17%
Progress on our pay gaps
60.3%
lower than the UK gender mean average
68.0%
lower than the UK gender median average
13.8%
reduction in our mean gender pay gap
12.8%
reduction in our median gender pay gap
9.1%
reduction in our mean ethnicity pay gap
1.2%
reduction in our median ethnicity pay gap
(Data from April 2022)
Pay
A ‘pay gap’ is an equality measure that shows the difference in average earnings between demographic groups. It does not show differences in pay for comparable jobs. Unequal pay has been illegal for 45 years.
Pay gap data helps us target interventions to improve representation across the organisation. While we have a legal duty to publish our gender pay gap data, we choose to publish our ethnicity pay gap data and plan to start publishing disability pay gap data within the next two years.
Salary
Since 2021, the difference in gender pay gap has evened out slightly in the lower quartiles and we’ve seen a small rise in the number of women in the upper middle quartile.
This has helped us narrow the median gender pay gap in 2022 to 4.8% – far below the UK average (14.9%). Our mean gender pay gap is also down to 5.5%, from 6.4% last year, because we have appointed more women to senior roles.
There are more women working at the Financial Ombudsman than men. However, they tend to be younger and have a shorter length of service. Men tend to stay longer at the organisation, so they’re more likely to be at the higher end of the pay quartile. These factors have a negative impact on our progress towards a 0% pay gap.
Ethnicity pay gap reporting isn’t mandatory, so we can’t compare our data with UK averages.
In 2022, we achieved a 9.1% reduction in our mean ethnicity pay gap (to 20.3%), while our median ethnicity pay gap fell to 14.7%. We’re pleased to see all our ethnicity pay gaps – that is, bonus, mean and median – fall for the third successive year, although the difference is smaller than we’d have liked.
Length of service has a large impact on pay. In the past, the ethnic composition of the organisation was less diverse than it is now, so we have more long-serving colleagues who aren’t from ethnic minority groups.
When we grew to meet the heavy demand that payment protection insurance (PPI) put on our organisation, we became significantly more ethnically diverse. As this more ethnically diverse cohort rises through the organisation, we’re monitoring career progression and appraisal ratings to identify ways to close our ethnicity pay gap further. Our target is to close this pay gap by 20.0%, year on year.
Bonuses
Our mean gender pay gap for bonuses favoured women (-0.2%) for the first time, while the median measure remained closed for the second year in a row. This is because women at the Financial Ombudsman performed better in appraisals.
For bonuses, our median ethnicity pay gap has now closed, while our mean is down to 7.0% from 10.1% last year. Ethnic minority colleagues fall slightly behind in annual appraisal ratings, which link to bonus payments and so, to the mean bonus pay gap.
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The ‘median’ is the midpoint value in a data range. The mean – or average – is the sum of all the values, divided by how many values there are.
The median is usually considered a more representative measure of pay gaps than the mean. That’s because a small number of very large or very small values can greatly affect the mean and therefore distort the overall picture.
To measure our gender and ethnicity pay gaps, we compare the median and mean hourly earnings of different groups:
- men and women for the gender pay gap, and
- white and ethnic minority employees for the ethnicity pay gap.
The difference between the two groups is given as a percentage. Pay gaps between groups are usually the result of differences in representation at senior and higher-paying levels. For the purposes of this analysis, we have not included interim appointments among our staff figures.
Our data snapshots
We take our representation and pay gap snapshots at different times of the year. Our representation snapshot is taken on 7 December every year while pay gap data is taken on 5 April.
We have kept to the same dates for each so that we can make an accurate comparison with previous years and, therefore, capture a true picture of how we're progressing.
Colleagues are not obliged to state their ethnicity. They have the option of choosing ‘other’ and ‘prefer not to say’. The data only reflects staff who’ve chosen to report their ethnic group.
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Gender pay gap (as at 5 April 2022)
Pay 2022 2021 Difference in median pay 4.8% 5.5% Difference in mean pay 5.5% 6.4% Difference in median bonus pay 0.0% 0.0% Difference in mean bonus pay -0.2% 1.7% Bonus Male Female Overall 78.3% 79.6% 79.0% Pay quartile distribution Male Female 2022 2021 2022 2021 Upper quartile 50.9% 49.0% 49.1% 51.0% Upper middle quartile 47.7% 48.2% 52.3% 51.8% Lower middle quartile 44.2% 40.4% 55.8% 59.6% Lower quartile 41.7% 40.6% 58.3% 59.4% -
Ethnicity pay gap (as at 5 April 2022)
Pay 2022 2021 Difference in median pay 14.7% 14.9% Difference in mean pay 20.3% 22.3% Pay quartile distribution White Ethnic Minority 2022 2021 2022 2021 Upper quartile 79.2% 81.3% 20.8% 18.8% Upper middle quartile 64.5% 61.9% 35.5% 38.1% Lower middle quartile 53.7% 46.9% 46.3% 53.1% Lower quartile 49.7% 52.0% 50.3% 48.0% Bonus 2022 2021 Difference in median bonus pay 0.0% 0.0% Difference in mean bonus pay 7.0% 10.1%
Closing gaps, widening representation
We are setting ourselves ambitious targets:
20%
reduction in our ethnicity and gender pay gaps
20%
of senior managers to be from ethnic minority groups
50%
of senior managers to be women
To accelerate progress in ethnic minority pay and representation, we have identified five key areas to focus on:
- more representation up the employment ladder
- more opportunities to learn and develop
- more action to prevent microaggressions and biases from occurring
- support to enable those who speak up when a concern does arise to feel safe and know that they’ll be taken seriously
- better insights into how our staff progress through the organisation
We have also given consideration to how we can further close our gender pay gap. After analysing data, reviewing employee feedback and looking at best practice, we’ve decided to focus on three key areas where we can improve:
- promoting a culture of flexibility at all stages of the employee journey
- encouraging and empowering more female candidates and colleagues to apply for higher paid roles
- making the return to work following long-term leave, like maternity leave, smooth and supportive for career development
