FSA tightens bankers bonus rules to include all high-earning employees

Bankers earning more than £1m a year face a new bonus clampdown by the Financial Services Authority (FSA).

The City watchdog has proposed to expand its code on pay so that any employee of a UK bank who earns more than £1m will be forced to defer 60% of their bonus for three years.

The move by the FSA is expected to effect up to 5,000 bankers.

Under the FSA’s previous guidance, the regulator said it would only impose these restrictions on those with a direct involvement in the running of a firm. This affected bosses earning more than £500,000 but did not include traders and other executives.

The bonus clampdown by the City watchdog follows attempts by banks to make big cash payouts to top earners by claiming they were not “significant persons” under the FSA definitions.

The £1m figure includes total salary and bonuses, but only the payment of bonuses will be subject to deferral.

It is though the new guidelines could provide an extra incentive for banks to raise salaries rather than pay big bonuses, the Times reported.

Sign up to our weekly round-up of HR news and guidance

Receive the Personnel Today Direct e-newsletter every Wednesday

Email(Required)

OptOut

From time to time, we will send you emails about selected products, events and services from Personnel Today - but you can choose to opt-out at any time. If you do not wish to receive these emails, please tick this box.

Phone

This field is for validation purposes and should be left unchanged.

Δ

Meanwhile all bankers’ bonuses worth more than £25,000 will also be subject to a 50% one-off tax by the government, announced in the Pre-Budget Report.

City banks are expected to pay out in excess of £40bn in salaries and bonuses over the next two weeks, despite a government tax aimed at curbing excessive bonuses, the Guardian has reported.