City misconduct under scrutiny

bowler08:27 Wednesday 30th July 2014
BBC Radio Cambridgeshire

[P]AUL STAINTON: The Bank of England is preparing to announce some of the toughest restrictions on bankers’ pay anywhere in the world. It’s expected the Bank will change its code of conduct for city pay to make it possible to claw back bonuses for up to seven years after they’re awarded. There’ll also be a consultation on powers to jail those found guilty of reckless misconduct. The review was ordered following a series of scandals, including the mis-selling of insurance and the rigging of the Interbank lending rates. Here’s our business reporter Adam Kirtley.

ADAM KIRTLEY: Interest rate rigging, mis-selling of PPI, foreign currency misconduct, bankers albeit a rogue few have been at it for years. And later this morning Bank of England is expected to announce tough new rules on bonuses. At the moment, bankers get much of their pay through bonuses, some cash, but they can be in shares, which they can cash in or vest around three years after they’ve been awarded. However the Bank of England is likely to say that bonuses, even if cashed in and spent, will be clawed back if that banker has been naughty. That’s far more draconian than the current provision to take back bonuses that have been awarded but not realised. This is to ensure that the bad practice that has been all too often in the news in the last few years is not seen to be rewarded. There may also be a proposal that there’s a consultation on handing down jail sentences for the worst perpetrators of what is effectively fraud. The worry is that the UK will have such strict bank rules under these proposals that some bankers may go abroad to work. They could also see banks raising basic pay, and relying less on bonuses.
PAUL STAINTON: Adam Kirtley on the new rules for bankers. But will it stop the excesses and the underhand dealings? That’s the question I suppose.

========