Move to claw back bankers’ bonuses

RECKLESS bankers could be stripped of bonuses even after they have cashed them in, under plans set out by the Bank of England.

The Bank is proposing a toughening up of the remuneration code that could see employment contracts changed to allow for clawback of bonuses already pocketed.

Regulators currently have the power to force f irms to halt bonus payments that have not yet been cashed in, but once paid they are immune from clawback.

But the Bank has started a two- month consultation on new clawback plans where there is evidence of employee misbehaviour or significant error, where a firm or business division has suffered a material financial hit, or where there has been failure in risk management.

It also wants to ensure the new rules apply to those indirectly responsible, such as bosses who should be held accountable for the behaviour of their staff, culture and strategy, as well as those who failed to take steps to identify or address misconduct.

If approved, the new rules — which come in the wake of recommendations from MPs and peers on the Parliamentary Commission on Banking Standards — would come into effect on January 1 next year.

The move follows the financial crisis and a series of recent scandals, including mis-selling of payment protection insurance which has so far cost the banking industry more than £20 billion.