The report's key findings are as follows:

Earnings. A significant gender pay gap exists across the respondent organisations on all pay measures (basic pay, total earnings and performance-related pay). When comparing average full-time annual gross earnings, women earn 55% less than their male counterparts in this sector, against a national average of 28%. On bonuses, the gap widens to a gulf: women employees receive, on average, just one fifth of the bonuses received by men.

The EHRC accepts that some of the pay differential could be explained by factors outside the immediate control of respondent organisations, such as “occupational segregation” (where women dominate lower paid roles, such as in call centres) or the fact that men tend to study the subjects which are more highly prized in the industry. However, with the report revealing that even within equivalent job grades women are typically paid significantly less than their male counterparts, this points to discrimination which cannot be so easily explained.

The difference is not just historical: the report demonstrates that the pay differential is being perpetuated with new recruits. In 86% of responses, female new recruits received lower starting salaries, on average, than men who had joined in the same period.

Pay monitoring and transparency. Only a handful of companies had conducted formal job evaluations or an equal pay audit, steps which were viewed positively by the EHRC. Fewer than a quarter of respondent companies monitored performance-related payments by gender, with only three reporting that they monitor starting salaries by gender: a matter of "particular concern".

The culture of secrecy surrounding pay, particularly bonuses, was highlighted as a factor contributing to the continuing existence of such a marked disparity in pay between men and women. Line management discretion came in for particular criticism, with suggestions made in oral evidence that such a process affords wide scope for discrimination, whether via derogatory attitudes towards women, or because men are more likely to ask for more. As one witness said: "you end up greasing the squeakiest wheel".

Recruitment and progression. Women have different experiences from those of male colleagues in the context of recruitment and progression. The report notes that management appears frequently to ask female candidates about their family circumstances and responsibilities, with the inevitable risk of sex discrimination claims.

The potential for progression is seen to be in the hands of line managers who tend to be male, some of whom have unfavourable attitudes towards women workers, who can be seen as a "maternity risk". This is compounded by two further issues: pervading sexism, particularly in relation to client networking events, and a "macho" culture of long hours and presenteeism. One witness commented: "If you do not attend large drinking sessions, play billiards and speak and act like a man… then you have a small chance of success provided you dress like a model and express a wish never to have children."

Evidence provided to the inquiry also suggested that women’s experience of maternity leave does not always reflect company policy and highlighted a number of "maternity penalties", including clients being reallocated and proportions of any bonuses that might have accrued to women taking maternity leave being allocated to the employees who have assumed responsibility for the woman’s clients.

The report sets out a number of recommendations for organisations in the financial sector including:

Human Resources and Diversity teams (as well as in-house employment lawyers) across the sector have no doubt been groaning at the inquiry’s findings which, at best, highlight the divergence between company policy and practical experience in the financial services industry and, at worst, could spawn a plethora of equal pay and sex discrimination claims.

Over the coming months, the EHRC will be collaborating with stakeholders with a view to developing "a detailed and potent action plan" to address the gender inequalities in the sector. This will include working with companies (via a targeted consultation programme) to assist them in identifying gender bias in their pay systems and supporting their compliance with equal pay law.

The EHRC will also be lobbying to strengthen the provisions in the Equality Bill targeted at tackling pay secrecy which, in their current guise, it considers are too weak to allow women effectively to challenge their pay (see News brief “Equality Bill: the future is fair”, www.practicallaw.com/3-386-1801). The EHRC will be requesting an outright ban on employees being barred from discussing their pay.

It is clear that remuneration practices in the financial sector will remain under the microscope for some time and organisations would be wise not to ignore the report’s recommendations. This is particularly so in circumstances where the EHRC has emphasised its willingness to use its enforcement powers to take tough legal action where organisations are "in breach of the law and in denial of their responsibilities."