Baby Ace: Reckless bankers could be stripped of their bonuses under radical new plans by the Bank of England

Thursday, March 13, 2014

Reckless bankers could be stripped of their bonuses under radical new plans by the Bank of England

By

James Salmon

Hundreds of bank executives would be forced to re-apply for their jobs under radical plans being considered by the Bank of England after the Paul Flowers scandal.

The Bank is also consulting on new powers to claw back bonuses for wrongdoing or reckless behaviour, even after they have been cashed in.

A senior official at Threadneedle Street said regulators might ‘re-assess the fitness and propriety’ of senior staff under a tougher new vetting regime.

Clawing back cash: Could bankers be stripped of their hefty bonuses in the future?

Katharine Braddick admitted ‘some of the assessments made under the old regime, some of which have featured in the press, were inappropriate’.

Her comments are a clear reference to the appointment of a string of now disgraced names with meagre banking experience.

High-profile failures include Co-op Bank’s former chairman, the Reverend Paul Flowers, pictured, former HBOS chief executive Andy Hornby, former Royal Bank of Scotland chairman Sir Tom McKillop and former HBOS chairman Lord Stevenson.

Their appointments were rubber stamped by defunct City watchdog the Financial Services Authority, despite the lack of a single formal banking qualification between them.

Braddick, a director at the Bank’s Prudential Regulation Authority, said: ‘We have to recognise that there are many people who were approved by the FSA in the past who would not receive that approval today’.

Up to 1,180 senior executives and staff with ‘significant influence functions’, such as board members, could face rigorous interviews to determine whether they are fit to do their jobs.

The Bank of England and the Financial Conduct Authority will consult over the summer on plans to replace the existing ‘approved person’ regime with a tougher ‘senior persons regime’. It will also look at whether to extend banks’ powers to seize back bonuses from misbehaving bankers.

The new rules, which would come into force on January 1 2015, could apply to past awards that pay out after that date.

Barclays’ pay chief Sir John Sunderland is expected to face a vote to oust him at the bank’s AGM after approving a rise in bonuses despite falling profits.