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The UK financial services sector is suffering a recruitment crisis

Why Financial Services Firms Need to Cover Employment Shortfalls

Feb 2020

The UK financial services sector is suffering a recruitment crisis, according to leading experts, as it fails to attract talent, appeal as a career option and achieve the diversity of other sectors.  All create insurance implications for financial services firms at the sharp end of these trends.[1]

January 2020 saw HM Treasury warning that these issues need to be tackled, if the UK is not to lose out to other global financial services centres.  With financial services being a current strong point of the UK economy, this is a call to action that the Treasury hopes will be heard.  John Glen MP, of HM Treasury says the financial services skills gap increased by 30% between 2015 and 2017 and action is required.

The conversation is surrounding the need to upskill and retrain staff within the sector, particularly to fill the sector’s newer digital and technologically focused roles.  Ways to make a career in financial services more compelling also need to be found.  In 2007, the percentage of MBA graduates entering the financial services industry was 43%; it is now only 28%.

Furthermore, while 18% of young people say they intend to stay working within other economic sectors in the long-term, the figure is only 10% for those in financial services.

Training is another key area to address.  The FS sector has the third lowest spend on training per employee of any sector and the second lowest spend per trainee.

And then there are concerns about a lack of diversity.  Nine in ten workers in financial services in the UK are white and, whilst 44% of workers are women, this drops to just a third of senior managers.  Given that financial services hubs are largely in urban environments, the former statistic is worrying.  For women, the statistics may suggest a lack of opportunity at the top echelons of financial services companies, or a failure of the sector to retain women employees in the mid-term of their careers.

With the word ‘crisis’ used by the FS Skills Taskforce’s Chair, Mark Hoban, action is likely to be swiftly taken.  Changing patterns of recruitment, having to take on employees not particularly suited to roles because of the shallowness of the talent pool, and employing younger people not intending to stay in the career long-term, could have insurance implications, however.    The most obvious relate to employee dissatisfaction with their role, which can cause workplace friction and possible disciplinary issues. 

Similarly, if women’s careers opportunities are restricted in a way that is seen as unfair, tribunals and reputational damage could result.  If training budgets do not increase, there is also the risk of mistakes being made and employees blaming a lack of training, if dismissed after making an error.

Employment scenarios can often be fraught and such issues are quite common.  In the year April 1 2018 to March 31 2019, there were 121,975 employment tribunal applications – up from 109,685. The main areas of increase have been in sex discrimination, unfair dismissal, failure to inform and consult on a redundancy and disability discrimination.[2]

If you are a financial services sector employer, you may already be struggling with employment issues.  Employers Liability insurance to a limit of at least £5m is a legal requirement of employers, but this may not be enough protection for all the risks within your business and you may require a wider safety net.

If you need to discuss the insurance options available to you, a meeting with a broker should prove beneficial.  To find a broker who can assist you, please use our ‘Find a Local Broker’ tool.