The environment for Chief Executive Officers (CEOs) continues to change as stakeholder demands increase and market volatility persists. The need strong leadership is more critical than ever.
At Redgrave, we understand the importance of effective CEO succession planning and leadership development in the financial services sector. In our most recent annual CEO Succession Trends report, we explore noteworthy trends in CEO turnover and tenure, focusing on retail and SME banking, general insurance, life, pensions, retirement, wealth, and asset management in the UK.
1. CEO Turnover
It’s no surprise that the CEO turnover in 2022 at 17.1% was lower than the 10-year-average of 18.3%, given high turnover in recent years. Specifically, 2019 saw a rate of 26.8%, the highest turnover since the peak of the global financial crisis in 2008, and 22.5% in 2021, following the upheaval caused by Covid-19.
2. Cross-Sector Variances
As in previous reports, we’ve compared CEO turnover across four key segments of the UK financial services market: retail and SME banking, general insurance, life, pensions and retirement and wealth and asset management. Where a company operates in more than one segment, we’ve included that company in all segments in which it operates.
Retail and SME Banking
At 26.2%, 2022 saw the highest rate of CEO turnover for the past six years. This includes leadership changes at four of the large high street banks. Debbie Crosbie became the new CEO at Nationwide Building Society and Mike Regnier took on the CEO role at Santander UK. Katie Danby stepped in to run HSBC’s Wealth & Personal Banking business and at LBG, Vim Maru’s role as Group Director, Retail Bank was decomposed into three smaller roles. There were further leadership changes at three other top ten building societies (Yorkshire, Skipton and Nottingham) – interestingly, all saw the appointment of CEOs who have built their careers in mainstream retail banking. CEO changes also took place at specialist lenders (Masthaven, Freedom Finance and Amigo Loans) and at tech-led banks, such as the appointment of Alex Mollart at Tandem Bank.
General Insurance and Life, Pensions and Retirement
There was a significantly lower CEO turnover in these two segments, which had both seen particularly high levels of annual CEO change since 2019. Always relatively volatile, especially in personal lines, general insurance saw one of the highest ever rates of CEO turnover in 2021 (27.9%), but there was a complete reverse in 2022 with the lowest rate of change for more than five years at 9.1%. There were, however, notable promotions at larger firms, including Aki Hussain (Hiscox) and Ken Norgrove (RSA UK & International).
Similarly, after a near record rate of CEO change at 38.7% in 2021, the life, pensions and retirement segment also had a much quieter year in 2022, with just 11.7% turnover. Notable new CEO appointments include Tom Pearce (Rothesay), David Hynam (LV=) and Nici Audhlam-Gardiner (Foresters Financial).
Wealth and Asset Management
There was a relatively high, but not record-breaking, level of CEO change in the wealth and asset management segment, at 27.3%. Many of these changes were to be expected following recent M&A activity, for example, Embark’s Phil Brown did not move with the deal that saw the firm he founded become part of Lloyds Banking Group. Nevertheless, there were leadership changes at a couple of the UK’s largest players, with Andrea Rossi joining M&G and Stephen Levin stepping-up at Quilter.
3. CEO Tenure
The average CEO tenure across UK financial services at the end of 2022 decreased to 3.2 years – from 3.4 years at the end of 2021. The graph below shows the average number of years’ tenure held by CEOs across each financial services segment. Here, we further break down the UK general insurance market into personal lines, and commercial and London markets. Again, where a company operates in multiple segments, we’ve included it in all segments.
Retail and SME Banking
Here, we saw the highest rate of CEO turnover over the last six years, with more than one in four CEOs being replaced. In addition, some of the banking CEOs who stood-down had enjoyed long tenures – for example, David Cutter, former CEO at Skipton Building Society, and David Marlow, former CEO at Nottingham Building Society, who both featured in the 2022 report’s top 10 longest serving CEO list. This led to a fall in average CEO tenure across the sector to one of its lowest levels since the 2008 global financial crisis.
Wealth and Asset Management
As with retail and SME banking, wealth and asset management saw a decreased average CEO tenure in 2022 – to 2.4 years. Again, this was a consequent of high CEO turnover – in this case, driven by a high-level of M&A activity in the sector, especially in the platform (both D2C & adviser) and IFA distribution sub-segments.
Personal Lines and Life, Pensions and Retirement
In 2022, personal lines and life, pensions and retirement saw low rates of CEO change. As a result, despite the overall reduction in CEO tenure across financial services, the average CEO tenure, as of 31st December, increased marginally in these two segments – to 3.5% and 4.2% respectively.
4. Longest-Serving CEOs
Interestingly, 50% of the CEOs featured in our 2022 report’s top 10 longest serving CEO list stood down last year. We can expect further change in 2023 as Nigel Wilson, who was knighted for Finance and Regional Development in the 2022 New Year’s Honours List, announced at the end of January that he plans to retire from executive life. Time will tell whether Sir Nigel’s successor joins before the end of 2023.
As in previous years, we’ve not included CEOs who were founders or co-founders of the businesses they lead. For example, long-service founders include Kevin Spencer of Markerstudy (21.5 years), Stephen Mendel of ManyPets (10.5 years), Anne Boden of Starling Bank (8.9 years), Freddie Macnamara of Cuvva (8.9 years) and Mark Mullen of Atom Bank (8.3 years).
|1. Nigel Terrington||Paragon Bank||27.7||retail/SME banking|
|2. Carl Shuker||A-Plan||12.5||general insurance|
|3. Jonathan Westhoff||West Bromwich BS||11.7||retail/SME banking|
|4. Andy Golding||OneSavings Bank||11.1||retail/SME banking|
|5. Simon Wainwright||RGA||10.8||reinsurance|
|6. Nigel Wilson||Legal & General||10.7||life, pensions & retirement|
|7. Mark Hews||Ecclesiastical||9.7||general insurance|
|8. Katherine Garner||Sun Life of Canada||9.7||life, pensions & retirement|
|9. Brian Cassin||Experian||8.5||consumer credit|
|10. Ann-Marie O’Dea||Shepherds Friendly||7.9||life, pensions & retirement|
5. Role before CEO
Here, we look at the roles in which the current crop of CEOs performed immediately before they stepped into their CEO role. The last four years have seen a continued gradual increase in the proportion of CEOs who had been operating in another business leadership role previously – from 61% in 2019, 62% in 2020, 67% in 2021 and up further to a record-breaking 74% for 2022. Clearly, when replacing a CEO, there is little substitute for previous business or P&L leadership experience.
Within UK financial services, the proportion of CEOs who were promoted from CFO remained low, at just 13%. Current CEOs who stepped up from CFO in the last 12 months include Aki Hussain (Hiscox), Mike Summersgill (AJ Bell), Danny Malone (Amigo Loans) and Alasdair Lenman (Yorkshire Building Society), who is acting in an interim capacity and will be succeeded by Susan Allen, the Society’s first ever female CEO.
Historically, former CFOs have been seen as steady hands on the tiller during difficult economic times. That 2022 was tough is endorsed by the fact that 16% of all new CEOs across the 146 firms surveyed were promoted from CFO. While 2023 will remain hard going, we don’t expect an increase in the proportion of CEOs who are promoted from CFO over the coming 12 months. Some CEOs who were promoted from CFO have either stepped down already in 2023, such as Penny James at Direct Line, or have recently announced their decision to step down, including Nigel Wilson and Chris Hill, at L&G and Hargreaves Lansdown respectively.
Given the regulated nature of UK financial services, Boards can feel pressure to conduct a comprehensive market search when replacing their CEO. Regardless of how effectively reputations and relationships with the Board have been built, a serving CFO without business leadership experience might therefore be considered a left field candidate. Of course, this view will be mitigated if the CFO has gained P&L leadership experience, either prior to becoming CFO or concurrently with their finance leadership accountabilities. Taking on an external non-executive directorship can also mitigate a lack of previous P&L leadership experience. Personal reputations can be enhanced by serving as an iNED, strengthening the CFOs credibility and, therefore, promotion prospects. Evidence shows that c50% of former CFOs who are now operating as CEO became an iNED during their CFO tenure.
Diversity, Equity & Inclusion (DE&I)
It’s clear that fostering a diverse and inclusive culture enables a better response to customers’ ever-changing needs and is therefore key to long-term business success. Cranfield University’s Female FTSE Board Report, published in July 2022, highlights that the proportion of women in Non-Executive Director roles at FTSE100 and FTSE250 companies reached an all-time high of 45.5% and 45.3% respectively.
The report highlighted that 48 FTSE100 and 110 FTSE250 companies have already met or exceeded the Women Leaders Review target of having 40% women on the Board by 2025. Financial services fared relatively well against these targets, as represented by Moneysupermarket.com reporting a Board with 71% women, and Admiral Group and Schroders both reporting Boards comprising of 55% women.
All progress is good progress. Tony Danker, the CBI’s Director-General shares his view, which is endorsed by the statistics.
The [Female FTSE Board Report] shows that while some important progress has been made, most directorship roles occupied by women are at the non-executive level, rather than CEOs or Chairs. This isn’t good enough.
Cranfield’s report showed that only 21% of FTSE100 companies and 14.8% of FTSE250 companies have a woman Chair. Of the FTSE100 companies with women Chairs, financial services represented 27.8% – including Annette Court (Admiral), Deanna Oppenheimer (Hargreaves Lansdown), Baroness Shriti Vadera (Prudential), Dame Elizabeth Corley (Schroders) and Fiona McBain (Scottish Mortgage Investment Trust). A record-breaking 34.3% of FTSE250 companies with a woman Chair now operate within financial services – these include Dame Helena Morrissey (AJ Bell), Danuta Gray (Direct Line), Nichola Pease (Jupiter Fund Management), and Ruth Markland (Quilter). We note that Paragon Bank’s Fiona Clutterbuck stepped down after the Cranfield report was published.
The lack of women holding executive director (ED) roles remains concerning. The Cranfield report highlights that the percentage of female EDs at FTSE100 companies increased marginally to 16.8%, up from 13.7%. Fewer than one in six EDs being women shows that there is still much more that needs to be done. Interestingly though, since the report was published, Charlotte Jones joined Aviva as it’s Group CFO. As a result, along with NatWest, Aviva became one of just four FTSE100 firms with two women in ED roles. There was a marginal increase of female EDs at FTSE250 to 12.1%, from 11.3%. However, this was merely due to a decrease in the total the number of ED roles. For the third year running, there remain only 47 women holding ED roles across the FTSE250. Again, financial services compares well to some other sectors with the following women serving as CFO – Sally Lake (Beazley), Scilla Grimble (Moneysupermarket.com), Natalie Kershaw (Lancashire Holdings), April Talintyre (OSB Group) and Jennifer Mathias (Rathbones Group).
As of 31st December 2022, 18.5% of the CEOs at the financial services companies surveyed were women. This has increased from 16.9% twelve months earlier. But as Robin Budenberg, Chair, Lloyds Banking Group, shared in the FTSE Women Leaders Review,
More needs to be done to cement the culture change required to deliver true gender balance. We know that there are more than enough talented women leaders. We need to ensure the opportunities are there too. In my view, women are more likely to want to be part of an organisation if they see women at the top.
Established CEOs, such as Milena Mondini de Focatiis (Admiral), Amanda Blanc (Aviva) and Alison Rose (NatWest) were joined by the following:
- Debbie Crosbie, Nationwide Building Society – with more than 25 years of financial services leadership experience, Debbie joined the UK’s largest building society as CEO in June 2022. Prior to this, Debbie was CEO of TSB Bank and, before that, spent 20+ years with Clydesdale Bank, including as Acting CEO.
- Susan Allen, Yorkshire Building Society – it was announced in August 2022 that Susan was appointed as CEO. While her official start date hasn’t been confirmed, it is expected that she will take on the position in early 2023. Susan will be stepping out of her role as Head of Customer Transformation at Barclays to take on the new role. Prior to this, she was responsible of Santander UK’s retail and business banking businesses.
- Sue Hayes, Nottingham Building Society – bringing leadership experience gained over the previous 15+ years, Sue took over at The Nottingham in March 2022. Sue was previously CEO at GB Bank and Group MD, Retail Banking at Aldermore. She also led retail, premier, wealth and business banking divisions at Barclays and Santander UK.
- Jackie Leiper, Embark Group – having spent more than 12 years within LBG, Jackie took-over as CEO of Embark shortly after its acquisition by the bank, and integration into Scottish Widows. Jackie also leads LBG’s pensions and stockbroking businesses and is Chair of the Group’s Scottish ExCo.
- Nici Audhlam-Gardiner, Foresters Financial – Nici became CEO of Foresters in September 2022. Previously Nici was ED/ Chief Commercial Officer at another mutual, OneFamily. Before that, Nici worked as a strategy consultant with McKinsey, and held leadership roles with Saga, RBS (the future Williams & Glyn) and Santander UK.
- Emma Steeley, Freedom Finance – Emma joined Pollen Street Capital-sponsored, digital lending marketplace, Freedom Finance in July. Prior to this, Emma was CEO of AccountScore, the bank transaction data analytics division of Equifax.
Expectations for the coming year
The relative lack of women operating as CEO remains concerning, and the challenges for ambitious CFOs should be noted. While we believe that firms should focus on appointing the very best candidate for all senior appointments, for diversity to progress at the business leadership level, the near-term focus should be placed on the appointment of talented women into divisional MD-type roles. During searches of this nature, the time for positive discrimination should be during the candidate identification and long-listing phases of project. Employers should be even more diligent in ensuring that their chosen search partner is not just a willing participant in the DE&I agenda but also has the flexibility required to search broadly across multiple markets to optimise the likelihood of a diverse shortlist being delivered.
Until relatively recently, the diversity agenda has focused almost exclusively on gender. However, chaired by Sir John Parker, the Parker Review was commissioned by the Department of Business, Energy & Industrial Strategy (BEIS) in 2015 to consult on the ethnic diversity of UK boards. Consequently, progress is now being made around ethnic minority representation but one community that has not yet been as visible on the radar of corporate Boards is the LGBTQ+ executive community.
We expect that 2023 will experience a slightly above average rate of CEO change. There were several CEOs appointments in banking which were announced last year where the new CEOs have taken up, or will take up their new roles in 2023 – including Vim Maru (Barclays), Jose Carvalho (HSBC) and Chira Barua (LBG).We believe that the recent trend for long-service CEOs to segue from executive to non-executive careers will continue and may result in a further reduction in average tenure in retail and SME banking.
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By Conrad Hills
The Basis for the Study
The retail and SME banking sub-segment include the big 6 banks, established challengers, specialist lenders, larger building societies and start-up banks, including those with digital-only business models. The leading consumer lending businesses, with both traditional and peer-to-peer (P2P) models, are also included.
On the general insurance side, the major personal lines underwriters and brokers, established insurTechs, commercial and London markets carriers and the larger brokerage groups are included. For life, pensions and retirement, we’ve reviewed the leading pensions, retirement solutions and protection providers, including the larger mutuals with a customer-owned model. We’ve also studied FTSE350-listed wealth managers and quoted private banks, as well as the leading networks and investments firms focused on the mass affluent segment.
As a common denominator, we’ve included the heads of specialist divisions and UK-focused businesses of some of the larger financial services groups, as well as the Group CEOs. For example, while it’s part of AXA UK & Ireland, AXA Health is one of the big three private health insurers in the UK and, therefore, both Claudio Gienal and Tracy Garrad, the CEOs of AXA UK and AXA Health, are included in our study.
 We’ve counted this as one CEO change.