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Workers say pay still excessive in UK financial services

Published on Wednesday, 05 Jun 2013
The skyline of London's financial district is viewed from Greenwich park in London, U.K. (BLOOMBERG)
Pedestrians walk through the More London office space in London, U.K., on Tuesday, April 3, 2012. U.K. banks are increasingly concerned about their ability to attract employees as hiring in financial services rose in the first quarter, according to a survey by Britain's biggest business lobby group. (BLOOMBERG)
Workers pass through Reuters Plaza as they exit the Canary Wharf business and shopping district at the end of the working day in London, U.K. (BLOOMBERG)

LONDON - Pay and bonuses in Britain’s financial services sector remain excessive and encourage risk-taking, according to those working in it, undermining efforts by politicians and regulators to reform an industry blamed for its role in the financial crisis.  

Britons struggling in the economic downturn have been infuriated by financial services companies, particularly banks rescued by the government at the height of the crisis, which continue to dole out rewards many times the average wage.

Three-quarters of financial services employees, and two-thirds of senior managers, said some people in their organisations were still paid excessively, according to a survey published by the Chartered Institute of Personnel and Development (CIPD) on Thursday.

Almost two-thirds of the 1,000 workers polled also said some of their colleagues were rewarded in a way that encouraged inappropriate behaviour, for example withholding information from co-workers, excessive and unauthorised risk-taking and even lying to customers. Fewer than one in three said they were proud to work in the financial services sector.

On top of the anger over pay, the public’s trust in the industry has been shaken by a series of scandals including interest rate-rigging, breaches of anti-money laundering controls and the mis-selling of products.

Finance Minister George Osborne set up a cross-party Parliamentary Commission on Banking Standards last year to look at how to change the culture at banks. It will report its recommendations later this month.

Peter Cheese, chief executive of the CIPD, said some progress has been made, with culture change now being taken seriously by the bosses of big institutions, as well as executive boards and regulators.

He described comments from people like Barclay’s Chief Executive Antony Jenkins, who on his arrival at the bank last year vowed to tear up Barclays’ profits-at-all-costs culture, as the “first and most critical step” towards realising change. But he said there was still a long way to go.

The CIPD survey showed the focus on reform has yet to trickle down from the top, with less than 40 percent of workers saying senior management had led culture change initiatives within their organisations. 
Cheese said firms who did not try to change could face wider problems, particularly with recruiting. 

“This generation (of graduates) is looking at it slightly differently and they are not leaping to work with a bank because they don’t trust and believe in the culture, purpose and value of the bank.”  


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