Tough regime threatens bonuses for reckless bankers
The Bank of England has confirmed plans for a tough new regime for reckless bankers allowing bonuses to be clawed back seven years after they are awarded. Changes to the Bank's remuneration code will also mean that even pay-outs that have already been pocketed could be reclaimed.
The announcement comes after a consultation launched earlier this year and the new rules are expected to come into force from January next year, in time for the next round of City bonuses. It follows the financial crisis and a series of scandals in recent years, such as the mis-selling of payment protection insurance (PPI).
Those payments have already cost the banking industry more than £20bn in compensation costs so far.
Bonus rules have been strengthened since the credit crunch struck, with bank payouts deferred for five years and made largely in shares. But there has been frustration that millions of pounds in bonuses paid out in the run-up to the banking meltdown are untouchable.
Samantha Mangwana, lawyer at Slater & Gordon, said: "It may not be possible ultimately to recover payments from individuals seven to 10 years later if they no longer have the funds. Bonuses long since spent on school fees, lavish lifestyle, (or which) have become the property of others may not realistically be retrieved."