Exposed: Life as a senior executive in the financial sector.
Ever wished you could be paid a lot and be held accountable for very little?
That seems to be life at the pointy end of a host of big financial institutions, according to a keynote address by Wayne Byrnes, Chairman of the Australian Prudential Regulation Authority (APRA).
Speaking at the Australian Financial Review Banking and Wealth Summit in Sydney on Wednesday. He said the “carrots are large and the sticks are brittle” when detailing APRA’s review of executives’ pay at 12 financial institutions.
"Not only are rewards generous, but there are seemingly few repercussions for poor outcomes," he said.
APRA’s review covered 280 senior roles across the banking, insurance and superannuation sectors between 2014 and 2016.
How often in recent years have we seen CEOs and industry leaders walk away with massive pay packets despite poor performances? It is an area the financial services royal commission will explore.
Mr Byrnes said: “There has been limited evidence of material financial consequences for senior executives when risk outcomes have been poor in their area of responsibility.”
He added that he had been “personally surprised” by a lack of accountability in developing sound risk practices.
So will the introduction of the Banking Executive Accountability Regime (BEAR), which is intended to ensure senior bankers are more accountable for their actions, make all the difference?
It should, Mr Byrnes said.
“It's not about heavy-handed punishment. It is not about heads on sticks on those things, but it's trying to make sure that when remuneration decisions are taken and variable compensation is decided on, that there's a holistic view of performance."
He said it was concerning that the review showed people in middle management more regularly bore the brunt of poor risk-taking than senior executives.