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Regulators launch new rules governing bankers' bonuses Regulators launch new rules governing bankers' bonuses
(about 1 hour later)
Financial regulators have announced new rules governing bankers' bonuses.Financial regulators have announced new rules governing bankers' bonuses.
The Bank of England's Prudential Regulation Authority and the Financial Conduct Authority say they want to "discourage irresponsible risk-taking and short-termism".The Bank of England's Prudential Regulation Authority and the Financial Conduct Authority say they want to "discourage irresponsible risk-taking and short-termism".
Under the new rules, senior managers could have their bonuses clawed back for up to 10 years in misconduct cases.Under the new rules, senior managers could have their bonuses clawed back for up to 10 years in misconduct cases.
FCA boss Martin Wheatley said the rules were part of a wider campaign to "embed an accountable culture in the City".FCA boss Martin Wheatley said the rules were part of a wider campaign to "embed an accountable culture in the City".
They were "a crucial step to rebuild public trust in financial services", he added.They were "a crucial step to rebuild public trust in financial services", he added.
The new rules - which follow a near-year long consultation - apply to banks, building societies and some investment firms.The new rules - which follow a near-year long consultation - apply to banks, building societies and some investment firms.
The main rule changes mean:The main rule changes mean:
The rules relating to bonus clawbacks and deferrals will not come into effect until 1 January 2016, whereas the other rules will be applied from 1 July 2015.
But the Bank of England said buyouts of unpaid bonuses by new employers would not be banned, although managers would not be able to receive the money any sooner than if they had stayed at their former company.But the Bank of England said buyouts of unpaid bonuses by new employers would not be banned, although managers would not be able to receive the money any sooner than if they had stayed at their former company.
Andrew Bailey, the Bank's deputy governor for prudential regulation and head of the PRA, said: "Effective financial regulation involves creating appropriate incentives to encourage individuals to take greater responsibility for their actions.Andrew Bailey, the Bank's deputy governor for prudential regulation and head of the PRA, said: "Effective financial regulation involves creating appropriate incentives to encourage individuals to take greater responsibility for their actions.
"Our intention is that people in positions of responsibility are rewarded for behaviour which fosters a culture of effective risk management and thus promotes the safety and soundness of individual institutions.""Our intention is that people in positions of responsibility are rewarded for behaviour which fosters a culture of effective risk management and thus promotes the safety and soundness of individual institutions."