Bank employees are working in a "culture of fear" and are genuinely frightened of speaking out on virtually any issue for fear it will damage their career prospects, according to the Irish Bank Officials Association (IBOA).
Its general secretary, Mr Larry Broderick, told the Dáil Committee on Finance and the Public Service that there was a need to encourage staff to speak their mind and called for legislation to establish a "whistleblowers' charter".
"The current ethics culture is focused on short-term goals and not high standards," he said. "There has to be an understanding that business strategies must be subservient to ethical standards and not the other way around," he told the committee.
He suggested that the "rot" set in across Irish financial institutions in the late 1980s and early 1990s and blamed the switch to more performance-related pay for fostering a culture of greed at the expense of good practice.
Calling for the whistleblowers' charter, Mr Broderick said "this was something that had been mooted in Ireland for a number of years but has never been put in a legislative framework".
"There are numerous international examples where legislation to protect whistleblowers is in place, works well and is an issue which should, in our view, be revisited," he said.
Meanwhile, the Dáil committee members were incensed at AIB chairman Mr Dermot Gleeson's brief reply to its chairman, Mr Seán Fleming TD, after it again asked the bank to appear before it.
Labour finance spokeswoman Ms Joan Burton said Mr Gleeson, whose letter merely acknowledged the latest correspondence from the committee, had given "two fingers" to them. Sinn Féin TD Mr Caoimhghín Ó Caoláin said that Mr Gleeson's 14-word response was breathtaking in its brevity and spoke volumes about AIB's corporate culture.
The committee has twice asked the Republic's biggest bank to appear before it to explain how it overcharged customers on foreign exchange transactions for more than a decade and to raise issues about its culture and corporate governance.
AIB has said it will accept the committee's invitation but believed it should not attend until the investigations into overcharging are completed at the end of July.
The committee is considering its next move in relation to the bank.
In its presentation, the IBOA said that proper support and systems must be put in place to achieve ethical standards in banks. It proposed regular training and development in the best ethical practices and standards for all staff and especially for senior executives.
The IBOA said it was time to establish a forum on banking to restore international confidence in Irish financial institutions.
