Afternoon:
7°c
Bonuses across London could be slashed under tough new rules published today.
The Financial Services Authority is extending a clampdown on banker payouts to a much wider range of jobs in finance.
The move will hit at least 2,500 firms in the Square Mile, Canary Wharf and Mayfair, compared with only 27 under current regulations.
They will include hedge funds, asset managers, venture capitalists, stockbrokers and corporate finance operations. Critics claimed it would encourage the best “talent” to depart to countries such as the US or Switzerland, putting Britain's financial services industry at a huge disadvantage.
Nicholas Stretch of law firm CMS Cameron McKenna said: “Many people will be asking whether such a complicated regulatory regime for remuneration, now a cottage industry in its own right, is really necessary.”
In the wake of the financial crisis the FSA ordered that at least 40 per cent of bonuses for bankers be deferred for at least three years. The figure rises to 60 per cent for bonuses of more than £500,000. The aim was to dissuade bankers from doing short-term risky deals that turn sour later. The EU is pushing through similar rules.
The FSA code also demands that at least 50 per cent of bonuses must be paid in shares rather than cash.
And the payment of “guaranteed” incentives of more than one year — used frequently to lure staff from rival banks — will be limited to “exceptional circumstances”. The FSA said it would employ a “proportional approach”, implying that it will enforce the code rigorously at the largest firms but more lightly at small ones.
Reader views (2)
I do not believe that any body will be leaving, all bonuses will only be put off and replaced by shares which is a more lucrative idea, do you really think we are all absolutely stupid.
- Davey_buoy, Chertsey, 29/07/2010 18:53
Report abuse
sigh! How disappointing
- Adrian, London, 29/07/2010 17:28
Report abuse
