Ever since the global financial crisis threw the planet into disarray way back in 2007, the blame for the disaster has been laid squarely at the door of certain bankers. Though in some cases this was justified, and others it was not, there can be no question that bankers' pay has been put under an increasingly harsh spotlight as the planet's finances continue their slow recovery.
Indeed, when crisis continued to worsen as the months rolled on, bankers were pilloried for taking obscene bonuses as the financial world burned around them. Eventually, enough was enough, and the big banks reluctantly launched a public investigation into their pay practices. How deep, though, did these enquiries go, and are bankers still being paid far too much in these times of austerity?
According to an article appearing in the Sydney Morning Herald, incentives stemming from many banks' remuneration programs is one of the main factors that have hurt banking in the wake of the financial crisis, with several institutions stating that these are to blame for many bankers' reckless, greedy and downright irresponsible behaviour.
"Pay someone to behave a certain way and there's a good chance they will."
"In my view, the scandals in financial advice, life insurance and rate-setting are primarily caused by one thing: the remuneration structure. Pay someone to behave a certain way and there's a good chance they will," said Chris Cuffe in Cuffelinks.
As the former big cheese at the top of Colonial First State, Mr Cuffe certainly has the right and the inside knowledge to lend his opinion to the debate, and it's one that seems to be shared across the industry.
From top to bottom
It's not only the fat cat bankers at the top of the tree who are doing all they can to ensure they get their massive bonuses, no matter how unscrupulous it might be. Even those near the bottom – the frontline staff who you can meet by walking into any Big Four bank – feel enormous pressure from above to sell credit cards, loans and suchlike. Without hitting a certain quota, they may not become eligible for a pay rise or monthly bonus, meaning that they'll always be looking to get in there with the upsell, regardless of if it's needed.
Well, that used to be the way, but each of the major Australian banks have now halted dangling such incentives in front of staff with regards to how it will affect their pay – and in the case of National Australia Bank, this includes their branch managers, too.
Even so, the seedy, money-grabbing culture of the big banks continues to permeate, which is why we at CAPE are big pioneers of customer-owned banking and its transparency from all angles. To find out more about what we can do for you, get in touch with our friendly team today.