SEVEN years on from the crash, City watchdogs are introducing new measures to regulate bankers’ bonuses. It’s hard to call which aspect of this development is the most dispiriting: the fact that direct intervention is again required, or the time it has taken to get this far.
Banking’s reluctance to embrace the changes required to reform a wayward industry remains unacceptable to the British public that bailed out institutions which stood on the brink of catastrophe. Efforts have been made by the banks to get their house in order since then, but the measures put in place have not been enough. The banking world needs to be rehabilitated in the eyes of society, but the evidence continues to demonstrate that there is a serious disconnect between top bankers and the real world.
Public confidence and trust in the industry remain rock bottom, and there is legitimate anger over the continued sense of greed and arrogance that each new revelation exposes. Recently, we found that bankers had been rigging foreign exchange rates after a similar practice in the Libor market was being exposed. As Libor manipulators were condemned and pursued, others continued to rig the forex market. The audacity is breathtaking.
Now regulators want to extend the timescale during which bonuses can be clawed back, from seven years to ten years. And the reason why this is necessary? Predictably, it is because some are trying to find a way around the very regulations that were supposed to draw them into line. For the hardcore who refuse to conform, there has been no recognition or understanding of the position they are in.
To avoid clawbank, bonus “buy-out” payments are made to new employees to compensate for unpaid remuneration that is cancelled when they leave their previous firm. Banks have also tried to side-step European rules capping bonuses, by introducing role-based pay awards.
These examples of bending the rules indicate that, although the Treasury says Britain has the toughest rules on bankers’ pay of any major financial centre, regulations have not been effective enough.
The industry will argue that problems such as manipulation are caused by a minority, and that may be true. Nevertheless, banking has not given adequate demonstration of a collective will to learn lessons and change. The picture remains of a dysfunctional banking system which is still struggling to implement measures that were clearly necessary years ago.
Analysts have called for positive incentives to reward ethical behaviour, thus creating a new culture. This is laudable, but for such a strategy to be effective, first we need the identification and removal of those who have no interest in the health or reputation of the banking system, but every interest in themselves.
Calais is our problem, too
THE migrant situation at Calais has reached crisis point, but the problem did not arrive overnight.
It is true that the surge of attempts to reach the United Kingdom has been sparked by a strike at the French port, forcing lorry drivers to use the Eurotunnel instead of cross-Channel ferries. Long queues of slow-moving traffic have made UK-bound lorries easy targets for roaming packs of men.
But police say that in the first six months of this year, 19,000 attempts to reach the UK have been foiled – up from 8,000 for the same period last year.
What we are witnessing is desperation, with human life risked hundreds of times every day in search of a new life. Many of the migrants are people who had good jobs in their homeland, until war or persecution made them flee. They have lost everything, and what little they had left was taken by human traffickers who smuggled them into the EU. For the English-speakers among them, reaching the UK is seen as the best way of seeking asylum in Europe. For others, it is simply the land of milk and honey.
A fence has been erected at Calais to control migrants. It has been useless. Now the ‘answer’ is to build a second fence, which will also be useless. A dozen fences will not stop people who are willing to throw themselves at moving lorries and cling to the chassis for dear life.
This problem has existed since the 1990s, and a solution remains elusive. The flashpoint is across the Channel, but right now the UK government cannot pretend this is someone else’s problem. Ultimately, however, this is a matter the EU must address. An effective response, based on a clear and fair strategy that all nations sign up to, can’t come quick enough.