Australia’s prudential regulator has proposed a new rule that would require banking executives to wait up to seven years to receive bonus payments and have pay linked to non-financial criteria. John Lonsdale, deputy chair of APRA, says that existing remuneration arrangements aren’t incentivising the right behaviours.

The post from Finanical Times goes on to explain, “In the wake of financial scandals and falling profits investors have balked at the generous awards to executives in the country’s four big banks — Commonwealth Bank of Australia, ANZ Bank, Westpac and National Australia Bank — delivering large protest votes against their remuneration reports.”

While incentive schemes are an essential driver of behavior, APRA and other regulators hoping to curb misconduct in the industry should give equal attention to non-financial drivers of employee misconduct, such as firm culture and behavioral norms that are poorly understood.

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