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Junior bankers risk being fired by wary bosses, UK law firm warns
[LONDON] Lower-ranking bankers could be the unintended victims of new UK rules that make bosses responsible for regulatory lapses caused by their junior colleagues, a London firm of employment lawyers warned.
British regulations intended to improve internal oversight at banks may trigger a new wave of unfair-dismissal claims as managers attempting to protect themselves preemptively dismiss staff who could put the company at risk, said Jon Gilligan, a partner at GQ Employment Law.
From March 2016, managers at UK banks will be accountable to the Financial Conduct Authority and the Prudential Regulation Authority for lapses that take place on their watch. As a result, mistakes and suspicious conduct that may have once warranted an inquiry or reprimand may now result in termination because senior staff are less likely to take time to manage junior bankers' performance, according to Gilligan.
"Senior banking staff will not want to take the fall if an under-performing team member puts the bank at risk of regulatory action," Mr Gilligan said. "The risk is that managers will act in haste and that unfair dismissal or constructive dismissal claims will follow." The UK's biggest banks are already facing a spate of employment lawsuits from former traders were dismissed during the benchmark rigging probes. Cases involving Citigroup Inc, HSBC Holdings Plc, Royal Bank of Scotland Plc, Lloyds Banking Group Plc and Bank of America Corp's Merrill Lynch are under way or pending.
"The FCA's and PRA's determination to create much more individual responsibility for any failures that occur in the banking sector is likely to cause considerable upheaval throughout the City and create significant tension between senior managers and banks' HR and Legal teams," Mr Gilligan said.
"Senior staff will want to have a high level of clarity about their areas of responsibility and might resist taking on additional responsibilities if they fear that their team could fall foul of the regulator," he said.