Bank of England will 'claw back' bankers' bonuses
Reckless bankers will be forced to pay back previous bonuses and could even face prison
The Bank of England has set out new rules that would strip bonuses from bankers caught acting improperly, even if their wrongdoing did not emerge for several years.
Bonus payments could be clawed back up to seven years after being awarded, the BBC reports.
Described as "among the toughest" in the banking world, the new rules could:
- be used to punish misconduct, poor risk management and other malpractice that may not be apparent until years after the event
- force bankers to pay back previous bonuses, even if they had been paid in shares and had already been spent
- allow bankers found guilty of "reckless misconduct" to be jailed for up to seven years
- place the burden of proof on senior bankers to prove they were either unaware of the misconduct, or had challenged it
The announcement follows several serious scandals in the banking sector and comes just days after Lloyds Banking Group was fined £218m for "serious misconduct".
Speaking before the announcement, Omar Ali, head of banking and capital markets at EY consultancy, told Reuters that the new rules were "the strictest of any market or any industry" and "likely to be a game-changer".
The British Banker's Association has said the rules may hinder the UK-based banks and could force top bankers to leave the country.
However, Barclays boss Antony Jenkins told the BBC Radio 4's Today programme that his bank is already able to demand the repayment of bonuses, if deemed appropriate. "If someone has done something wrong and performed badly we have the right to claw the bonus back today," he said.