When bank executives escape punitive pay cuts

regulation/APRA/wayne-byres/bear/banking/

5 September 2018
| By Mike |
image
image
expand image

There have been multiple examples of lower level employees within Australia’s major financial institutions having had their pay cut for failures while senior executives went unscathed, according to Australian Prudential Regulation Authority (APRA) chairman, Wayne Byres.

Addressing the annual Risk Management Association conference, Byres cited APRA’s review of industry remuneration practices to flag the treatment of executive salary outcomes as an area which needed to be addressed.

“Our review noted multiple examples where employees at lower levels received downward adjustments to their remuneration, but these were not always matched by corresponding adjustments at an executive level to recognise overall line or functional accountability,” the APRA chairman said.

Byres said that while it was not implying that there should be a “one-for-one” adjustment it seemed to him that “overall, senior executives seemed somewhat insulated from the consequences of poor risk outcomes”.

“This must change,” Byres said.

Elsewhere in his address, the APRA chairman revealed that only around 85 individuals would end up being covered by the Bank Executive Accountability Regime (BEAR) and that it is only likely to be utilised after some form of damage has been done.

“The BEAR clearly has teeth and use of the BEAR’s enforcement provisions will demonstrate to the community that there are going to be clear and material consequences for poor prudential outcomes. That will be welcomed,” Byres said.

“But it will only come after some event that has damaged the trust and standing of the industry in the first place, so at best the BEAR might help square the ledger ex post.”

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

2 months 3 weeks ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

2 months 3 weeks ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

4 months 3 weeks ago

ASIC has suspended the Australian Financial Services Licence of a Melbourne-based financial advice firm....

1 week 3 days ago

The corporate regulator has issued infringement notices to three AFSLs whose financial advisers provided personal advice to a retail client while unregistered....

2 weeks 2 days ago

ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test....

3 weeks ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND