Reward and risk needed redefining, say regulators
After a year-long consultation, two financial regulators have today announced new rules for how bankers should be rewarded.
The Financial Conduct Authority (FCA), and the Bank of England’s Prudential Regulation Authority say they want the power to claw back up to tenyears’ worth of bonuses in misconduct cases, while non-execs are to be barred from receiving them at all, with no bonuses to be paid to people working in tax-payer supported firms.
Other changes include incentive bonuses for senior managers being delayed until seven years after the performance measurement period has ended.
The rules have been proposed to eliminate short-term behaviours causing scandals that have brought many banks to their knees in recent years.
FCA CEO MartinuWheatley said the rules were designed to 'embed an accountable culture in the City.' He added they were 'a crucial step to rebuild public trust in financial services.'
Buyouts and unpaid bonuses for new employees will not be banned, but the regulators say they do want more explicit links between risks and rewards.
Changes to bonus claw-backs and deferrals come into effect on 1 January 2016, while other rules will be applied from 1 July 2015.