Swedish finance firms skirt bonus rules: report

Roughly half of Sweden's financial firms have failed to abide by rules for handing out performance-based bonuses, a new report has shown.

Swedish finance firms skirt bonus rules: report

According to findings released on Monday by the Swedish Financial Supervisory Authority (Finansinspektionen – FI), bonus systems at Swedish banks and investment firms have problems in how they are constructed and accounted for and how money is paid out.

“This is a remarkably bad result. It shows the need for a change in attitude in the industry. We’re now going to proceed and carry out more in-depth investigations on these companies,” said FI head Martin Andersson at a press conference.

Following the in-depth investigations, companies found to not follow the rules governing bonuses will be punished.

“If it’s the case that they don’t convincing explanations, we will proceed as usual and that can end with us intervening in the companies’ operations,” said FI lawyer Per Håkansson.

However, for the moment, FI has not yet revealed the names of the companies who have failed to follow the rules.

“For now, all such matters remain confidential,” said Andersson.

In the report, the agency found that in many cases the companies’ actions stem from a lack of understanding of current regulations.

But some of the companies are thought to have made a concerted effort to ignore the rules.

“In some cases, the deficiencies are so remarkable that it gives FI the impression that the company consciously went around the rules,” the agency said in a statement.

Sweden’s Financial Markets Minister Peter Norman welcomed the agency’s report, encouraging FI to keep pressure on finance firms that don’t abide by current regulations.

“The actors in the finance industry don’t follow the regulations is a provocation and reduces trust in an industry which has been recently been deeply involved in the developments which led to crisis, unemployment, and a drop in production. It’s good that FI has followed up on the implementation of the new, tougher rules and sees to it that they are followed,” he said in a statement.

“FI should take additional measures if necessary to ensure that bonuses in the finance industry don’t become haven for greed and increased risk taking.”

The agency’s report encompasses 41 banks, credit institutions, investment funds and fund management companies and was carried out during November 2010.

The tougher regulations, which came into effect on January 1st, 2010, are based on recommendations from the European Commission and are meant to ensure that companies’ remuneration policies are consistent with good risk management and don’t encourage short-term profits and excessive risk-taking.

Among other things, the rules stipulate at least 60 percent of an employee’s bonus should be deferred for at least three years if that person’s actions had a material impact on the risk exposure of the firm.

The firm can also decide that deferred bonuses be cancelled altogether under certain circumstances, such as if the firm’s position is significantly weakened.

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Bizum: Why you probably need this free payment app for life in Spain

With 12 million users in Spain, this mobile payment service is how many Spaniards choose to split the bill, pay over small amounts for services and even pay the rent. Here's how it works, what changes in 2021 and why you probably need it.

Bizum: Why you probably need this free payment app for life in Spain
Photo: StockSnap /Pixabay

What is Bizum?

Bizum is a Spanish mobile service that allows users to send an amount of money that usually ranges between 50 cents and €500 per operation, just by knowing the recipient’s phone number,

It’s a free app service which was launched by Spain’s main banks in 2016 as a way of competing with other mobile payment services such as Apple Pay, Google Pay, Samsung Pay, Paypal and others.

Why do Spaniards like using Bizum so much?

One of Bizum’s main advantages is that the sender doesn’t have to type out the long IBAN and other account details that come with regular money transfers.

There’s also the fact that the recipient receives the money immediately for free, whereas other immediate banking transfers often come with a price tag. 

It’s also possible to request money from another person through Bizum. 

Nowadays if you meet up with Spanish friends and it comes to splitting the bill, you’ll likely hear from at least one person, ¿Tienes Bizum? (Do you have Bizum?). 

Others use it for regular payments, even to pay their rent or services such as Nexflix and Spotify.

It’s fast, easy, free and according to a 2020 study by Caixabank Research, Bizum proved particularly useful during Spain’s Covid-19 lockdowns when going out to withdraw money from an ATM wasn’t always an option. 

Bizum is particularly popular among Spaniards aged 25 to 44, who make up 48 percent of users.

Many businesses and shops in Spain are now also allowing customers to pay through Bizum, so if you forget your wallet with your cards and cash in it, there’s the possibility of paying immediately through your mobile. 

All in all, Bizum is the go-to mobile payment service in Spain with more than 12 million users, so if you’re based in Spain it will probably come in handy for you to have it activated too.

Otherwise, your Spanish friends and acquaintances may be put off by the fact that they can’t give you the exact amount in cash, that they have to go to the ATM to withdraw money or that they have to spend time doing a stand bank transfer which may even cost them extra.

How is Bizum used?

Bizum does not work as an independent application, so to register you must do so through your mobile banking app. It may be possible through the mobile banking app you have already or through a separate app your bank offers for quick mobile payments. 

When you access Bizum, you’ll have to sign in to your banking app with your usual details and once in, you’ll have to choose which account you want to link the Bizum service to (you can only have one associated account, although this can be changed).

Next up you’ll need to select the person you’re sending money to from your mobile’s contact list or manually enter their phone number, type the amount to send and finally confirm the transaction by means of a code you’ll get via SMS. 

If the recipient has Bizum, the money appears in their account in just five seconds. If not, they will be prompted to sign up as it is necessary for the receiver of the money to have Bizum.

Bizum will let the sender know before the transaction occurs whether the recipient has Bizum.

If you want to request money instead of sending it, you also have to add the contact, the amount and the payment description. You then confirm the request and validate the operation with the code that you’ll get via SMS.

What changes about Bizum in 2021?

As of June 15th 2021,  the number of Bizum payments that you can receive has been reduced to 60 per month, compared to the 150 payments that were allowed up until now.

This will no doubt only affect very regular users.

The new rule only affects payments between individuals – companies will not be affected.

Why is Bizum reducing the number of payments per month?

“After more than four years of service, we adjusted the operation to the reality of what was being used. Only 0.07 percent of users received more than 60 bizums per month,”  Bizum’s Director of Business Development, Fernando Rodríguez is quoted as saying in 20 Minutos.

In fact, most recipients of bizums receive an average of 4.3 operations per month. “This is very far from the limit of the 60 that we have fixed,” emphasised Rodríguez.

Another reason that Bizum is reducing the number of payments is due to security issues. “By reducing the limit of operations received, it is more difficult to use Bizum to receive funds improperly,” Rodríguez told 20 Minutos. This means that fewer `under the table’ payments can be made.

It is important to note that this measure affects only the number of bizums that a user can receive. Anyone can continue to send as many bizums as they want per month.

The rest of the conditions remain as before: the amount allowed for each operation is between €0.5 and €500 (some banks allow higher payments up to €1,000), you cannot receive more than €2,000 per day and, at most, 30 recipients can be included in a joint payment. However, banks can add extra limits, so if in doubt you should check with your bank.

The future of Bizum 

Currently, more than twenty banks in Spain include Bizum payments as an option among their services and it has almost tripled its users in just two years, going from six million in 2019 to 15 million this year. 

By the end of 2021, Bizum hopes to have reached 20 million users and have 18,000 online businesses that accept it.


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