Professional Indemnity Insurance For Bankers
Professional indemnity insurance (PII) refers to a type of insurance that helps to protect those who provide a service to members of the public. PII is used by a range of businesses and professionals including builders, doctors, personal trainers, architects, massage therapists and bankers. If you are working as a banker, or if you are considering a move into the banking sector, then it is essential that you think about purchasing PII. In some instances it is even a mandatory requirement for them to have full PII in order able to legally operate. We reveal three reasons why PII insurance is so important for those in the banking profession.
Registration With Unions
Most white collar trade unions make it a requirement that bankers have PII before they are able to join them. Some countries have also introduced new legislation that makes it illegal for bankers to operate without PII. Check the employment laws in your country to see if PII is mandatory in the area that you work.
Protection From Claims
A quality PII policy should protect bankers from any claims that arise out of errors, omissions, neglect or even breach of duty.
Should financial aid be required for legal proceedings, advice, or compensation, the PII should also be able to cover at least most of it. This means that you can rest assured that you shouldn't have to cover costs in the event of a dispute.
These are just a few of the many reasons why every banker should have PII. A PII specialist will be able to asnwer further questions or listen to your requirements in order to recommend the best type of policy and the right cover amount for your needs.
Professional liability - what is the worst that can happen?
When you ask a child what he"d like to be when he grows up, odds are you won't hear him say "banker". Being a banker certainly doesn't make you popular, but it does make you weary of hearing the phrase: "in this financial climate..."
It could be because somewhere, in the back of your mind, you know that the media depicts bridges as the most sought-after hangout spot for bankers when there's a recession. It could be because people you know are struggling to make ends meet while your office chair has been keeping you cosy for years in a high-paying position, and doesn't show any signs of wanting to let you off. It could also be because you"re responsible for handling people's money and you seem to be the designated scapegoat whenever something goes wrong.
Whatever it is, you know this for a fact: mistakes are not allowed. That's because you can't wiggle your way out of settling your debts when you"re a banker, be they debts to the customers you"ve let down or debts to the bank. When a blunder does transpire, however, you know that the public will be all ears.
Kudos to the media, then, because how in the world else would the average taxpayer know that bankers are, sometimes, phenomenal blunderers? How else could they relate to bankers, those chaps they rarely even see thanks to the invention of the cashpoint? To err is human, they say, and by that standard, bankers make excellent human beings. Below are some solid banker bloopers, a good case in point and a reason to give yourself a good pat on the back if you"ve made your way up the corporate ladder without a trail of blunders for a legacy.
Sleeping is a luxury when you"re a banker
As a German bank in the state of Hesse found out, it pays to double-check. According to the BBC, a clerk fell asleep with his finger on the keyboard while he was transferring 64.20 euros out of a client's account, and ended up wiping out a whopping 222,222,222.22 euros in the process. The irony is that his supervisor was sacked instead, for failing to spot the difference, even though the woman had been working there for 27 years and her workload prevented her from spending more than two seconds to check each single transaction. Luckily, the error was corrected in due course and the German labour court demanded that the woman's employers reinstate her.
Don't you just wonder if the bank would have sacked her if the money had made its way into the bank account, not out of it?
Don't mess about with Libor
Take it from us, manipulating key interest rates is not all it's cracked up to be. Of course, we"re talking about trade profits that beggar belief, but somebody's bound to catch on, sooner or later. Take the Barclays case in June 2012. According to Reuters, Barclays fiddled with the London Interbank Offered Rate (Libor), causing countless customers to pay too much interest. The aim was to hide the excessive borrowing costs in incurred in the financial crisis, which would have damaged its credibility. In the end, Barclays paid hefty settlement fees and record fines to CTFC, U.S. Department of Justice and the Financial Services Authority. The main culprits were spared disgraceful layoffs as they unanimously chose to forego their yearly bonuses. To err is human; to forgive, divine, they say, and Barclays has a front seat reserved up there with the gods.
But stop the presses! There's more to this. A thorough investigation in this benchmark manipulation had more cuplrits springing up like mushrooms. Swiss bank UBS, Citigroup, Deutsche Bank, HSBC and JP Morgan are the names that feature heavily in the investigation, CNN reveals. They all seem to have tinkered with Libor.
When blood money is laundered and bankers come out smelling of roses
HSBC seemed to be the bank of choice for the Sinaloa Cartel in Mexico, Reuters says. In fact, the drug traffickers were so eager to bank with HSBC and the bank, in turn, so keen, that the cartel members would design special money boxes to fit the cashpoints and handle the hundreds of thousands of dollars laundered on a daily basis. The $1.92 billion dollar settlement was the largest one ever paid in December 2012, topping even the UBS Libor manipulation fines.
No country for tax evaders
Up until May 2014, we couldn't really call Switzerland a "tax haven", but we could certainly call it a "country of financial secrecy", as Wikipedia so cleverly puts it, out of deference to its inhabitants, who deeply resent that age-old label. But in May 2014, Credit Suisse came out with its tail between its hind legs, admitting that it helped clients avoid tax, according to The Financial Times. Paying $2.6 billion in penalties would more than make up for the mistake, the U.S. Department of Justice feels, after all, it was only about a few billionaires" shell accounts and some IRS document forging. While this was the biggest payout ever recorded at the time, it was still only equivalent to the bank's 2013 profits.
The blacklisted are shortlisted
Perhaps the most brazen of banker blunders, BNP Paribas" wrongdoings cost it $8.9 million, the fine it agreed to pay the U.S. only a month after the Credit Suisse scandal. As The New York Times reveals, France's largest bank transferred billions of dollars on behalf of blacklisted countries, including Sudan. it certainly isn't the first bank to settle a case of criminal sanction violation, but it most definitely is the first to admit guilt. The bankers pleaded guilty because Sudan was hosting Osama Bin Laden at the time and operating what was deemed to be a genocidal regime.
Cash bonuses or shares, that is the question
Returning to the saying "in the current financial climate", which was so near and dear to us all before 2010, some banks took responsibility for the financial crisis, to a certain extent. According to the BBC, a banker working for HBOS blamed the bonus culture whereby bankers received several times their yearly salaries for helping to bring about certain financial influxes. Whilst some bankers chose to have their bonuses in shares, others aimed to inflate their cash bonuses with condemnable behaviour. However, the bank boss ponted out that if these same employees, who were allegedly responsible for the disaster, were not paid so much they would leave. So, that's all right then.
Mixing business with pleasure
Occasionally, investment bankers become famous for reasons beyond their control. Sometimes it's for reasons beyond their mistresses" control. Whatever the cause, people don't take a double whammy of embezzlement and adultery lightly. Such was the case of a New York investment banker, the NY Post suggests, who made an account in his mistress" name to finance his lovechild, and mistakenly kept stealing his clients" money and diverting it to this account for years, until it amassed over $1 million. Ironically, the money was also being used by his father, who may have been blackmailing him. Luckily for him, his wife forgave him and pleaded with the judge to be lenient, saying "We all make mistakes".
No contingency funds? No worries?
The regulatory stress test was set up to look at banks" ability to bounce back in a hypothetical recession. The European Banking Authority cleared all UK banks in October 2014, according to the Guardian, yet the FTSE 100 dropped soon after. The test checks banks" financial strength, or in other words, assesses the extent to which their balance sheets would cope with fluctuations in economic growth, unemployment, house prices, etc. The main index was capital ratio and none of the banks fared very well in that department. The Prudential Regulation Authority is set to provide results for its own, stricter test conducted in December 2014. How is it then that banks barely pass these tests fully knowing when they take place? Don't ask us. Maybe if we keep our fingers crossed, bankers will stop snoozing and dishing out bonuses and set about gaining public credibility. Then again, maybe not.
Generosity comes at a price
Finally, we turn to a simple banking blunder which brought a Barclays part-time employee to the edge of financial ruin. According to The Telegraph, her employer mistakenly paid her twice her regular salary for years, starting with the time Barclays took over her previous company. Given that the women had 16 years of experience in the field, was promised a substantial raise, was given bonuses on top of this salary for years and full-time employees were paid more per hour than she used to be paid in the past, she thought the money was rightfully hers. Barclays even gave her references with salary confirmation when she applied for a mortgage. Luckily for her, a judge ruled she shouldn't give the money back, nor revert to her former salary until a year has expired because the payroll error was strictly the bankers" fault.
We do not give financial advice on this website. If in doubt get professional advice and always read the policy information before purchasing an insurance contract.