{"id":4997,"date":"2023-10-24T11:34:12","date_gmt":"2023-10-24T11:34:12","guid":{"rendered":"https:\/\/infundpros.com\/business\/uk-set-to-axe-cap-on-bankers-bonuses\/"},"modified":"2023-10-24T11:34:12","modified_gmt":"2023-10-24T11:34:12","slug":"uk-set-to-axe-cap-on-bankers-bonuses","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=4997","title":{"rendered":"UK set to axe cap on bankers\u2019 bonuses"},"content":{"rendered":"<div>\n<p>Unlock the Editor\u2019s Digest for free<\/p>\n<p class=\"article__content-sign-up-topic-description\"><span>Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=cc419caf-213d-418e-b921-90e80c7a114b\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>The UK will on Tuesday confirm that it is scrapping the cap on bankers\u2019 bonuses that was inherited from the EU as part of its post-Brexit push to boost the City of London, according to people familiar with the situation.<\/p>\n<p>The move follows a consultation earlier this year on plans to abolish a 2014 rule limiting bonuses to twice base pay for employees of banks, building societies and investment firms.<\/p>\n<p>The UK\u2019s top financial regulators argued against the ban when it was introduced, and the\u00a0government has claimed that lifting it will increase the post-Brexit competitiveness of the City.\u00a0<\/p>\n<p>Finance bosses privately gave a hesitant welcome to then chancellor Kwasi Kwarteng\u2019s announcement last September that the UK would abolish the measure, fearing a public backlash. They originally opposed the bonus cap because it forced them to lift fixed pay to retain staff.<\/p>\n<p>When the idea of scrapping the cap was mooted in June last year, Labour leader Sir Keir Starmer said the Conservatives\u2019 plan amounted to \u201cpay rises for bankers, pay cuts for district nurses\u201d. But the opposition party has since embarked on a charm offensive to win the City over ahead of the general election expected next year.<\/p>\n<p>The Treasury declined to comment on the imminent announcement, as did the Financial Conduct Authority and the Prudential Regulation Authority, the regulators that carried out the review jointly.<\/p>\n<p>PRA chief executive Sam Woods said in September 2021 that the regulator had \u201cnever been a big fan of the bonus cap\u201d since it reduced companies\u2019 flexibility to cut costs during a downturn.<\/p>\n<p>\u201cOver recent years, the regulators consider that growing evidence has emerged of undesired consequences of the rules on firms\u2019 safety and soundness and UK competitiveness,\u201d the PRA said in its consultation.<\/p>\n<p>The PRA proposed implementing the changes the day after the new rules were published, implying they would apply from October 25. The first pay period to be affected will be 2024.\u00a0<\/p>\n<p>The bonus cap was introduced in the EU to end the era of unlimited bonuses incentivising finance workers to take huge risks, which was seen as a threat to financial stability in the wake of the 2008-09 global financial crash.<\/p>\n<p>The UK has introduced other rules around pay to curb the threat to stability. These include requiring a percentage of bonuses to be paid out over a number of years, and allowing bonuses to be clawed back in cases of misconduct, poor individual performance and sometimes poor company performance.<\/p>\n<p>After the proposed removal of the bonus cap, UK regulators said they wanted firms to ensure fixed pay and bonuses were \u201cappropriately balanced\u201d and that no individual was \u201cdependent exclusively on variable remuneration, or to an extent likely to encourage them to take risks outside the risk appetite of the firm\u201d.<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.ft.com\/content\/cc419caf-213d-418e-b921-90e80c7a114b\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. The UK&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"class_list":{"0":"post-4997","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>UK set to axe cap on bankers\u2019 bonuses | inFundPros<\/title>\n<meta name=\"description\" content=\"Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The UK will on Tuesday confirm\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/infundpros.com\/?p=4997\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta 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