Cap on bankers’ bonuses scrapped
Financial regulators in the UK have scrapped the banker bonus cap, which has capped banker bonuses at two times their annual salary since 2014.
The cap was one of the key reforms introduced by the EU in the wake of the 2008 financial crisis. It was intended to help control a bonus culture that had been blamed for laying the groundwork for risky investments for short-term profits over long-term stability, further contributing to the banking crash.
The Bank of England and Financial Conduct Authority confirmed the cap would be abolished on October 31 – almost one year after Liz Truss first proposed plans to scrap the cap in a bid to boost investment and further remove the UK from EU rules post-Brexit.
The decision comes after lengthy debate over the regulations, with the FCA saying that any bonuses “[align] with and supporting a healthy culture, and encouraging positive outcomes for consumers”.
The Prudential Regulation Authority (PRA) said that scrapping the bonus cap would boost banks’ “safety and soundness”, and help “give firms further flexibility over their cost base to deal with downturns”.
Truss’ mini-budget was an economic disaster when announced in September 2022, and led to a crash of the GBP. The revival of the controversial plans has largely been interpreted by the media – and investors – as an example of the ongoing political and economic uncertainty in the UK, which has left the country scrambling to steer the ship.
However, aside from publications that lie to the far left or right, many outlets appear to be restrained in expressing an opinion on the decision – perhaps because rather than being a political one, it came directly from financial regulators.
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Cap on bankers’ bonuses to be abolished next week
Cap on bankers’ bonuses to be scrapped
Britain to scrap EU cap on banker bonuses in effort to boost City of London
Bankers’ bonus cap to be scrapped next week as Britain ditches EU rule in post-Brexit shake-up of City regulations to help London compete with New York, Paris and Frankfurt
