When bank executives escape punitive pay cuts
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.”
Recommended for you
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.
The Senate economics legislation committee has recommended Schedule 1 of the Delivering Better Financial Outcomes legislation be passed as it is a “faithful implementation” of the recommendations.
Treasurer Jim Chalmers has handed down his third budget, outlining the government’s macroeconomic forecasts and changes to superannuation.
