Seismic change to governance and culture required in banking sector

Banking review can reset the dial and ensure no return to the bad old days says FSU

The General Secretary of the Financial Services Union, John O’Connell has called for a seismic change to occur in the banking sector to avoid a return to what he described as “ the bad old days of poor culture, bad governance and shareholder dominance”

Reacting to the Central Bank announcement of a fine of €143,600,000, reduced to €100,520,000 imposed on Bank of Ireland for its handling of tracker mortgages Mr O’Connell said:

“Today’s announcement by the Central Bank of a record fine of €143,600,000, reduced to €100,520,000 to be paid by Bank of Ireland is the latest indictment of cultural and operational failure of the main retail banks in Ireland.

When the banking crash happened the regulatory framework for the banks was changed. We were promised more oversight, better safeguards, and a better culture to avoid similar mistakes happening again. It is important to point out that the tracker scandal happened after the banking crash and has continued until very recently. Given the recent attempt by AIB to remove cash services from 70 of its branches in the face of huge community and people resistance and the unbelievable high-handed approach of Ulster Bank in threatening to freeze customer accounts in recent days it is exceedingly difficult for anyone to claim that anything has changed, or any lessons have been learnt.

It is obvious that nothing will change unless there is radical change to the decision-making process at the highest level in the banks. Bank staff have worked tirelessly through covid and beyond providing a professional service to customer, businesses, and communities. They have been let down by the senior management of the Banks who have not learnt the lessons of the past and will not listen or act on the concerns expressed by staff and customers.

Trust will never be rebuilt in the sector without a seismic change to the Governance model of the Banks. The voice of staff and customers need to be at the heart of the decision-making process. This can only happen if there is a consumer and a staff representative on the boards of the main retail Banks. This will be resisted by the Banks, but the Minister should insist this change happens. SEARS legislation is slowly winding its way through the Oireachtas which should when enacted hold people to account for their actions. Combined, these two changes can make a difference to the culture and help rebuild trust in the sector. Ordinary bank staff on starting salaries of €26,000 have suffered over the last decade due to pay restrictions imposed on variable pay up to €20,000. Bank staff should not be punished for the mistakes and cultural deficiencies of senior management.

Like everyone else bank staff are struggling with cost-of-living increases. It is time the Minister for Finance lifted the variable pay restriction up to €20,000 which effects 23,000 ordinary bank staff and make it possible for Unions to collectively bargain with the three main retail Banks for variable pay and benefits for staff.

The Banking review is due to be completed and presented to the Minister for Finance in November. This is a chance for the dial to be reset and for the sector to offer itself as a modern, efficient, customer and staff centric organisation which treats its stakeholders with dignity and respect.”

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