People are fond of “looking at the bigger picture” but when it comes to the legal profession and FICC markets, frankly the bigger picture confuses me. How else can we explain how a number of traders are facing jail time for their role in the Libor scandal, Mark Johnson is facing the same – subject to appeal – in the FX space; and yet so many traders are winning their unfair dismissal cases?
It is hard not to look at what is going on and believe that not only is there a lot of collateral damage from the events of five or more years ago, but also that certain elements seem determined to claim their pound of flesh. It is just as hard not to believe it is time that everyone pauses for thought, because it’s getting out of control.
Taking five minutes out to clear the head and try to look at the bigger picture I find myself believing – as I have stated in this column several times before – that so many of these current headlines around unfair dismissals and jail sentences reflect the fact that there were cultural issues at the banks. One or two individuals may have broken rules deliberately and colluded (and I would point out that when they have sued for unfair dismissal they have lost) but the majority of people to lose their jobs, especially in the FX market, should not have done so.
If it was a cultural issue, as I believe, then the punishment was handed down (rightly) by the CFTC and other authorities when they fined the banks. There was – is – no need to pursue individuals for actions that were clearly condoned by the banks at the time, but still we grind through the headlines that make the industry look bad and the individuals victims.
It seems to me that barring an egregious misdemeanour clearly aimed at defrauding clients, investors or employers, the banks have been badly advised by their legal teams. I have read many findings from the UK employment tribunal system over the past few years and it seems pretty obvious that bank policies and procedures around dismissing staff were not robust enough. So why continue paying legal teams to fight cases you know you have little chance of winning?
Reading the judgement on the John Banerjee finding last week I found myself shaking my head at the breakdown in procedure – I am no expert in the field but I would have thought it obvious you don’t dismiss someone for time keeping issues (and he most assuredly had them) without a written warning?
I also don’t understand, looking at the broader issue, why so many dealers were dismissed for actions and behaviours that were not mentioned in annual appraisals. We worry about the world becoming obsessed with box-ticking exercises (and it most surely is) but it seems to me that the appraisal has become just that. I have spoken to people who have received a lower bonus for a higher appraisal rating than the previous year, and in nearly all cases the bank performed more or less in line with expectations both years.
If we are not going to worry about what the appraisals actually say, or indeed mention serious issues in them, then why waste so much time on them?
Going back to Banerjee’s case, the judge highlights what was clearly a fractious relationship between him and several co-workers and managers, but how on earth does the bank think it can continue to ignore those issues officially and then suddenly say, “you’re out”?
I really do think it is time that the banks reassessed their position on defending unfair dismissal cases by traders, especially when there is no evidence of direct misdemeanour. We, as an industry, have to accept the fact that we went through a dark period in which deteriorating behaviour was condoned – and on occasions even encouraged – and the banks need to recognise that fact as well.
Too many seem wrapped up in the negative publicity and fear that the regulators will come at them again to actually think through the damage to their reputation from being seen as organisations that couldn’t plan, implement and maintain something as simple as a disciplinary process.
It is not only about the banks, however, for this also requires the regulators to understand that often they are fining banks for behaviours which are clearly unacceptable in today’s market, but were seen as the norm just five or 10 years ago. The world moves on, including attitudes to certain behaviours, and the world’s financial regulators should not be immune. The time to draw a line under the fining frenzy has come and passed – as has the time for banks to try to defend their inadequate processes against unfair dismissal claims.
If we don’t draw the line then I fear the industry will continue to be an Aunt Sally for the legal and regulatory industry, and compliance and legal will get even more powerful (and paranoid). And if you’re wondering where that ends up I can assure you a major feature will be the lawyers getting rich again. The Banerjee case was not, in retrospect, particularly complicated, yet it involved more than 6,100 pages of documentation.
I understand he approached the claim as a whistleblower and that means there is no ceiling on the pay out, but if we take that level of documentation as the average for a normal unfair dismissal case, with the £80,000 ceiling, you have a worth of about £13 per page. Again I am no expert but I am not sure where there is value for money there for anyone but the lawyers.