BoE Governor says regulators will begin consulting within weeks on tougher claw-back rules for bankers’ bonuses

Regulators will begin consulting this month on plans to introduce new rules that would force banks to claw back pay from staff in the event of future problems even if the bonus had already been awarded to them, according to Mark Carney, the Governor of the Bank of England.

In a letter to MPs, Mr Carney said the Prudential Regulation Authority (PRA), the supervisor of Britain’s banks, would soon begin to seek comments from banks on updates to its remuneration code that could lead to even vested bonuses being returned.

“After a two-month consultation period the PRA Board expects to be in a position to make rules in time for firms to include claw back provisions in remuneration policies for the 2014/15 financial year,” wrote Mr Carney in a letter to Andrew Tyrie, chairman of the Treasury Select Committee.

As well as stricter claw back rules, Mr Carney said the PRA, which is run by the Bank of England, would look at the possibility of extending the minimum deferral period for bank bonuses from the current minimum of three to five years to improve the “alignment between reward and the maturity of risk”.

However, he said a recommendation from the Parliamentary Commission on Banking Standards to introduce new rules for banks “in receipt of direct taxpayer support”, including clauses allowing the cancellation of staff bonuses and pension rights would be difficult.

By , Banking Editor, Telegraph

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10675622/Mark-Carney-signals-move-on-bank-bonus-claw-back-rules.html

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