Bankers find there is a penalty for failure

Wordsmith

LE
Book Reviewer
#1
A bit of common sense in the banking sector.

Lloyds Bank strips five directors of more than £1 million in bonuses - Telegraph

Lloyds Banking Group is to strip five directors of more than £1 million in bonuses as a penalty for a financial scandal that cost the taxpayer-backed bank £3.2 billion last year. It will be the first time a British bank has exercised a “clawback” option on executive pay packages since the financial crisis and will lead to calls for similar moves at other lenders, including the Royal Bank of Scotland.

The Daily Telegraph has learned that Lloyds is taking back a bonus from senior bankers over their role in the mis-selling of payment protection insurance (PPI).

Eric Daniels, Lloyds’ former chief executive, will lose at least £360,000 of his 2010 bonus. Four other current and former directors will each have to forgo about £250,000.

The move comes after weeks of pressure from politicians and consumer groups for the banking sector to answer concerns that some bonus awards do not match individual performances.

The Financial Services Authority has also called for Britain’s banks to reflect one of the worst customer mis-selling scandals in recent memory in the pay packages of those responsible.
A bit of background here - the banks have been ordered to repay large sums of money for mis-sold payment protection insurance (PPI). At worse case they were selling PPI to the self-employed who had no chance of making a claim due to the small print in the contract. The directors got large bonuses in part due to profits made from this mis-sold PPI. Now, they are having part of their bonus withheld because they were at the top of the bank when this abuse went on.

Don't get we wrong. I think the UK needs a strong banking sector - it makes a vital contribution to our national balance sheet. But we'll only cut down on irresponsible risk taking when there are penalties for failure as well as bonuses for success.

Wordsmith
 
#2
It's nice to see something, but this is still only a fraction of the bonus they'll STILL RECEIVE...

How about a prison sentence for presiding over a fraudulant business practice? Now that's a consequence I can get behind...
 
#3
The biggest scandal is that an institution, the honesty of which many held as sacrosanct, has been shown to be less than honest. First it was endowment mortgages and now PPI. It used to be that the bank manager was the person who advised you on your finances. Where to invest and how to invest efficiently. Now it seems that the very people you should be able to turn to for good, honest advice, are one of the worst offenders for ripping the public off. It was all made so easy for them because of their reputation for honesty.
If anyone knows of a bank that operates the old-fashioned way please let me know, they can have my money!
 

Alsacien

MIA
Moderator
#4
The CEO, Daniels, has lost 360,000 quid of his 1.45 million quid bonus - that's him told then............and a victory for common sense........
 

TheIronDuke

On ROPS
On ROPs
Book Reviewer
#5
How about a prison sentence for presiding over a fraudulant business practice? Now that's a consequence I can get behind...
What, and repossess thousands of lifestyle businesses bankers setup having cashed their chips from the Sub-Prime Ponzi scheme that ran all through the 90's and into the early 20's? Think of all those poor luxury spa / Gite / rent-a-mansion / restaurant employees out of work.
 
#6
The CEO, Daniels, has lost 360,000 quid of his 1.45 million quid bonus - that's him told then............and a victory for common sense........
It is a step in the right direction and hopefully will become an established principle. However I note that the recall is because it cost the bank millions not because they mis-sold to the public!
 
#8
They are getting out of hand. I was asked to start paying extra insurance on my account and a bank manager said in a meeting that i should pay it to protect my money...until i reminded him that's what i consider their job to be.
No. You are paid interest on your cash deposit in compensation for the credit risk of that bank defaulting. The more risky business models (leveraged) should in a pure retail banking model pay higher interest rates.
 

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