In the financial sector, seven-figure paycheques and billion dollar deals are routine. So you might not expect something as seemingly mundane as the reimbursement of expenses to grab headlines. Yet, a recent employment tribunal ruling in London has done just that, shining a spotlight on corporate spending policies and their impact on even the most senior employees.
The case involves a UK-based managing director at the Canadian Pension Plan Investment Board. The employee had been sacked for gross misconduct after using his company credit card to fund personal travel. He racked up nearly £12,000 on the company card after his personal credit cards had been stolen in New York.
But this wasn’t some brazen attempt to defraud the firm. In fact, he had approval to use the corporate card and promptly reimbursed CPPIB. The situation unravelled, though, when HR took a sudden interest in who exactly his travel companion was — his girlfriend and not his daughter as he had told the firm. The scrutiny ratcheted up, and before long, he was out of a job.
In the ruling, the judge found in favour of the employee, stating that it was “understandable” for him to keep his personal life under wraps. When reported in the media, the verdict elicited a wave of (mostly supportive) reader responses, if the comment section of the Financial Times was anything to go by. In fact, this case has resonated deeply within the financial community, forcing a reckoning with how far policies around employee conduct and privacy have evolved in the post-2008 era.
To understand just how different things are today, we need to rewind to the 1990s — a time when the world of finance operated under very different norms. For those who cut their teeth in investment banking back then, expense reimbursement was a different beast entirely. We had corporate credit cards, but most bankers relied on cash advances because taxis and so many businesses didn’t take plastic. Bankers often found themselves juggling multiple currencies on international trips, especially in Europe before the advent of the euro. It was not unusual to have pesetas, lire, escudos, and four types of francs jangling in your pockets at any one time.
Bankers returning from international trips faced the unenviable task of organising heaps of crumpled, often smudged and barely legible receipts. Filling out expense forms was a total nightmare.
As for controls, they were lax by today’s standards. Bankers’ assistants often kept a stash of blank taxi receipts handy for when a few legitimate ones went missing. While this practice might cause surprise today, it was seen as a practical solution to an imperfect system. Moreover, receipts often weren’t required for expenses below a de minimis threshold, say £20.
Back then, expense reimbursement was more of an approximation than an exact science, with the understanding that sometimes you’d come out ahead, and other times you’d be shortchanged. The prevailing view was that it all balanced out.
Fast forward to the 2000s, and the financial sector started tightening the screws. Credit cards were more widely accepted by merchants, restaurants and taxis worldwide (though notoriously slow to catch on in Germany), and cash transactions started to decline.
The real transformation came with the smartphone boom in the mid-2010s, coupled with introduction of business expense apps. Suddenly, the days of filing paper receipts were over. A few taps on a screen could record, categorise and file expenses, making the reimbursement process far simpler. But, as technology advanced, so did the oversight. In short: no more paper but no more leeway.
With increased digitisation came tighter controls. No longer was expense reimbursement a rough estimate; it became a matter of exact accounting and exacting accountability. Regulatory changes, greater public scrutiny, and more emphasis on compliance and conduct pushed financial institutions to adopt more rigid expense policies.
Today’s highly controlled environment may be more accurate and less prone to abuse, but it is also colder, less forgiving, riddled with suspicion and riven with mistrust
The 2008 financial crisis further intensified this shift. While expense caps and policies had always existed, their enforcement took on a more impersonal and potentially severe character. What might have once resulted in a stern talking-to from your manager could now lead to a formal investigation, disciplinary action, even termination — and that’s without considering the risk of not passing muster under the Financial Conduct Authority’s standards for what constitutes a “fit and proper person” able to work in a “controlled function”.
Today’s financiers live in a fishbowl where their actions are under constant surveillance. Financial institutions can track their every move, monitor their locations, and scrutinise their business spending habits in real time. This level of oversight is genuine, and the consequences for messing up are draconian.
For example, junior bankers on both sides of the Atlantic have been disciplined for misusing food delivery apps like Seamless and Deliveroo, with some discovered ordering meals to their homes while claiming to work late at the office. In another high profile case, a Citigroup banker was dismissed for allegedly claiming his wife’s meal as his own during a business trip to The Netherlands. The amount of reimbursement claimed was pitifully low.
As for corporate credit cards, they come with sky-high spending limits, but also a lot of strings attached. What used to be a convenience for business travel and client entertainment has morphed into a minefield, where even minor discrepancies or anomalies can trigger investigations and severe consequences.
The shift from a culture of approximate reimbursement to one of exact accounting mirrors larger trends in the financial industry. Increased regulatory pressure and a heightened focus on compliance have reshaped many aspects of the workplace, and expense policies have become a microcosm of the transformation.
To be sure, the loosey-goosey systems of the past had their flaws. Blank receipts and tolerant oversight left the door open for (mostly minor) abuses. But it also reflected and fostered a culture of trust and flexibility. Today’s highly controlled environment may be more accurate and less prone to abuse, but it is also colder, less forgiving, riddled with suspicion and riven with mistrust.
The CPPIB case is a perfect example of this culture of scepticism and second-guessing. Why did HR press the senior employee so much about his travelling companion? The employee got prior approval and paid back the money — that should have been the end of the matter. Yet in a business setting in which you have a whole apparatus to control and audit employee behaviour, common sense and respect for privacy can easily be sacrificed at the altar of compliance.
The challenge for financial firms is to strike a balance between necessary oversight and avoiding an oppressive work environment. One can imagine a technological solution which not only tracks expenses but contains a more context-aware system that can distinguish between honest mistakes and intentional misuse. But technology only takes you so far. The real issue is cultural.
The story of expense reimbursement in investment banking is, in many ways, the story of the industry itself — a tale of digitalisation, heightened surveillance, mounting scrutiny, and the search for balance between trust and control. This may explain the outburst of support from so many in the City for the dismissed CPPIB employee. Financiers want to be treated as honest brokers, not scheming poachers.
And speaking of the 1990s, much as investment banking was the most prestigious career choice in decades gone by, so big tech may have become that now. But even in that cash-soaked enterprise there is no such thing as a free lunch — or household good — as employees of Meta found out recently. For those thinking of swerving the City for the perks of Silicon Valley, the grass is not always greener.