The below Parliamentary question was asked by Valerie Vaz on 2014-04-25.
To ask Mr Chancellor of the Exchequer, what recent assessment he has made of the prevalence of allowances being paid to senior bank executives to enable them to avoid the EU bonus cap.
Andrea Leadsom
The UK is at the forefront of global efforts to tackle excessive pay in the financial sector and ensure that pay is aligned with performance; our tough Remuneration Code requires deferral of at least 60% of bonuses of senior bankers and limits the amounts that can be paid in cash. Bonuses are down significantly since their peak under the last Government, and are now largely deferred and paid in shares.
In contrast, the EU’s bonus cap is a poorly thought through measure that undermines rather than reinforces our efforts by pushing up fixed pay. It was introduced without any proper impact assessment and has serious issues around its compatibility with the EU Treaty, and for these reasons we are challenging it in the European Court of Justice. However, pending the outcome, the Government is fully implementing the cap in the UK.
The Prudential Regulation Authority and Financial Conduct Authority have responsibility for ensuring that remuneration practices in the banking sector are compliant with the new rules.
