And when it conceded it would not benefit the UK to unilaterally impose practices that would only send banks - and bankers - scuttling overseas, you could see its logic. But the City watchdog, whose very existence is threatened if the Tories come into power next year, went a step further. It removed half of the firms that were originally to be affected on the grounds that they were too small.
These 19 banks must be rubbing their hands with glee. Sure, they traditionally haven't offered seven-figure sums and have thus been on the sidelines in the competition to attract what the City regards as the 'top talent'. But who knows what will happen now they are not constrained by the new code? Meanwhile, at their 26 larger rivals, guaranteed bonuses are banned and up to two-thirds of the bonuses offered to 'important people' and senior management must be deferred.
But hold on. Didn't traders in insurance giant AIG's Financial Products division already have deferred bonus schemes? This is the company Vanity Fair calls the "infamous" unit "staffed by expensively educated, highly paid traders, whose financial ineptitude is widely suspected of costing the US taxpayer $182.5 billion and counting". Yet its incentive system was not short-term. Staff had deferred half their pay for many years in a scheme that encouraged a long-term interest in the firm's performance. When AIG collapsed, staff at this division lost $500 million alone.
Focusing on pay does not get to the root of the problem. Regulation is not enough to discourage risk. This is a cultural issue and goes to the top. It's no surprise that some of the biggest casualties of the financial meltdown were run by leaders widely regarded as bullies.
This is where HR steps in. As Chris Roebuck says in our feature on p26: "If there had been a strong moral compass we might not be where we are now. Individuals who showed legal, but morally dubious, behaviour might have recognised their actions were contrary to the organisation's values." HR creates this moral compass. This is a real chance to prove its business relevance through helping companies to minimise risk.
Email sian.harrington@haymarket.com
