The Financial Conduct Authority (FCA) "struggles at senior levels” to recruit a diverse workforce, Megan Butler told delegates at the Women in Investment Festival on 3 March.
The FCA's executive director of supervision said that instead of not having senior women and those from diverse backgrounds at those levels in the organisation, it has found another "mechanism", which is to "grow our own".
At the inaugural festival, hosted by Investment Week and sister publications Professional Adviser and Professional Pensions at The Brewery in London, Butler said that the FCA's gender pay gap went "backwards by 0.3%" last year as she acknowledged "we have the same issues as the rest of the industry" when it comes to cultural change.
But she reiterated the regulator's target to have 45% of senior positions held by women in senior leadership in 2020 "later this year", climbing to 50% by 2025.
During her talk, Breaking the Glass Ceiling: An Economic Case for Gender Diversity, she said: "How well we do as an industry at large is a function of the culture that all of us promote. Culture change takes time and sustained commitment from leaders."
She added: "Diversity has become an imperative, our challenge is to make sure it stays that way."
Butler said there were "strong arguments" for the business case for diversity.
"Mixed gender investment funds [the teams that run them] attract 6% more inflows than teams run solely by men," she added.
Butler told delegates in London that while "we have seen a lot of talk" and "great tone from the top", the industry is yet to see "significant change on the ground".
"A number of large institutions have not signed up to the Women in Finance Charter and they have the largest gender pay gap - something we have noted," she said.
During her talk, Butler also emphasised the need to build a "sustainable" culture and that going from 5% to 30% of women senior executives overnight "would tell me firms are not thinking about this in a sustainable way".
Answering a delegate question about ‘queen bee syndrome', which is the name for when senior females do not help other women into senior-level positions, Butler said: "As a senior woman, you get used to being the only woman in the room. It is now my norm."
She added that when there are other women in the room with her, it does prompt her to "stop a minute".
"Don't underestimate how different it is for that senior woman in some of those moments. The way we change this is talk to those senior women. They may just not know how to do it."