Bank of England to include bonus deferrals in pay code consultation

No Pot Of Gold

The Bank of England is to begin consulting over a pay code for top City firms next year to incorporate the recommendation of an influential parliamentary report that bonuses should be deferred over 10 years.

In its response to the parliamentary commission on banking standards, the regulator also said it would need to consider the implications on directors' human rights if it were to adopt the idea of cancelling any deferred bonuses in case a bank had to be bailed out.

The Prudential Regulation Authority, the regulatory arm of the Bank of England, also concluded that it did not need extra powers to claw back bonuses from directors facing enforcement action by regulators. Any fines should be reflected in the bonus pools of banks.

Andrew Tyrie, the Conservative MP who chaired the commission, said the onus was now on regulators to act. "Banks are not the only institutions to have suffered from serious lapses. So did regulators. The vigour with which the new regulators embrace the banking commission's proposals – which give them new powers as well as new responsibilities – will be a litmus test of the extent to which they are putting these lapses right."

The PRA rejected one of the commission's ideas: to have a new category of "special measures" for firms facing regulatory problems.

But the PRA agreed that it should consider competition in the market and said it would report annually on what it has done to enhance competition and publish statistics on the authorisation of new banks.

Powered by article was written by Jill Treanor, for The Guardian on Monday 7th October 2013 20.10 Europe/London © Guardian News and Media Limited 2010


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