A month ago the FSA issued watered down rules on remuneration, but Lord Turner’s focus was on increasing capital requirements for banks in order to ensure they are better able to weather financial storms.
I agree with Lord Turner on that issue, and many G20 members do also, however, bonuses have and will remain a serious bone of contention and in a final communique issued on 25th September, a new raft of rules for implementation by members and overseen by the Financial Stability Board must now be implemented.
The G20 Final Communique proposals include:
- bonus deferrals;
- clawback of bonus payments in the event of subsequent losses;
- avoidance of multi-year guaranteed bonuses;
- increased disclosure requirements; and
- a limit imposed the size of the bonus pool by reference to the total income of the employing institution.