Cap on bankers’ bonuses to be abolished next week

Published

11 months ago

October 24, 2023

admin

The cap on bankers’ bonuses is to be abolished, financial regulators have announced.

From Tuesday 31 October, EU rules that limit bonus payments to twice a banker’s salary will be removed in the UK, the Bank of England’s Prudential Regulatory Authority (PRA) said.

The policy change was initially announced by former chancellor Kwasi Kwarteng in the infamous September 2022 mini-budget of the Liz Truss premiership.

It was one of the few announcements to be retained when Chancellor Jeremy Hunt took charge of the Treasury.

City executives had complained that the cap was a barrier to recruiting and retaining quality workers, and London was losing out on talented staff as a result.

The head of the London Stock Exchange had in May called for company bosses to be paid more.

“The alternative is we continue standing idly by as our biggest exports become skills, talent, tax revenue and the companies that generate it,” Julia Hoggett said.

From next week, there will be no legislative barriers on bonus payments for employees of banks, building societies and major investment firms that are regulated by the PRA.

The move is being made to deal with what the PRA and Financial Conduct Authority (FCA) said are “unintended consequences” of the cap, namely that salaries have been increased as a workaround.

Having high fixed yearly payments, rather than variable bonus sums, makes it harder for firms to adjust to times when financial performance is poor or to react to potential misconduct by a senior executive, a statement by the bodies said.

Click to subscribe to The Ian King Business Podcast wherever you get your podcasts

The announcement follows a period of consultation conducted by the PRA and will apply to the current and future financial years.

The cap was imposed in 2014 in the wake of the 2008 global financial crash. It was associated with incentivising bankers to take outsized risks, which the EU sought to discourage.

Not everyone has welcomed the removal of the cap.

“This is an obscene decision,” the Trades Union Congress (TUC) said.

“City financiers are already enjoying bumper bonuses. They don’t need another helping hand from the Conservatives,” TUC secretary general Paul Nowak said.

“At a time when millions up and down the country are struggling to make ends meet – this is an insult to working people.”

A spokesperson for the Treasury said: “Decisions on remuneration in the banking sector are for the PRA as the independent statutory regulator.”

Politics

Lisa Nandy says Sir Keir Starmer ‘very sensible’ to accept football tickets worth thousands

Published

2 hours ago

September 21, 2024

admin

Lisa Nandy says Sir Keir Starmer 'very sensible' to accept football tickets worth thousands

Lisa Nandy has said Sir Keir Starmer’s decision to accept thousands of pounds worth of football tickets was “very sensible”.

The minister for culture, media and sport also said she had never accepted free clothes from a donor.

Speaking to Sky News at the start of the Labour Party conference today, the MP for Wigan said: “The problem that has arisen since [Sir Keir] became leader of the opposition and then prime minister is that for him to sit in the stands would require a huge security detail, would be disruptive for other people and it would cost the taxpayer a lot of money.

“So I think he’s taken a very sensible decision that’s not the right and appropriate thing to do, and it’s right to accept that he has to go and sit in a different area.

“But I know that he’d much rather be sitting in the stands cheering people on with the usual crowd that he’s been going to the football with for years.”

Ms Nandy also said while she has not accepted free clothes – joking “I think you can probably see that I choose my own clothes sadly” – she doesn’t “make any judgements about what other members of parliament do”.

Follow the latest on politics

She said: “The only judgement I would make is if they’re breaking the rules, so they’re trying to hide what they’re doing. That’s when problems arise.

“Because the point of being open and transparent is that people can see where the relationships are, and they can then judge for themselves whether there’s been any undue influence.”

She asserted there had not been an undue influence in gifts accepted by senior Labour figures, adding: “We don’t want the news and the commentary to be dominated by conversations about clothes.

“We rightly have a system, I think, where the taxpayer doesn’t fund these things. We don’t claim on expenses for them. And so MPs will always take donations, will always take gifts in kind.

“MPs of all political parties have historically done that and that is the system that we have.”

She added: “I don’t think there’s any suggestion here that Keir Starmer has broken any rules. I don’t think there’s any suggestion that he’s done anything wrong.

“We expect our politicians to be well turned out, we expect them to be people who go out and represent us at different events and represent the country at different events and are clothed appropriately.

“But the point is that when we accept donations for that or for anything else, that we declare them and we’re open and transparent about them.”

👉 Click here to follow Electoral Dysfunction wherever you get your podcasts 👈

Sir Keir, Angela Rayner and Rachel Reeves said yesterday they will no longer accept donations in the future to pay for clothes.

The announcement followed criticism of Sir Keir’s gifts from donors, which included clothing worth £16,200 and multiple pairs of glasses worth £2,485, according to the MPs’ register of interests.

The register shows Ms Rayner has accepted clothing donations to the value of £2,230.

Sky News also revealed the scale of Sir Keir’s donations this week as part of our Westminster Accounts investigation.

Sir Keir was found to have received substantially more gifts and freebies than any other MP – his total in gifts, benefits, and hospitality topped £100,000 since December 2019.