View the article online at http://citywire.co.uk/wealth-manager/article/a751269
Bonus clawbacks unenforceable, says BBA
by Danielle Levy on May 15, 2014 at 08:19
The British Bankers Association has branded Bank of England proposals to claw bank banker bonuses as unenforceable.
The Financial Times reported that the lobby group has concluded the proposals could be deemed illegal in countries where UK banks operate, including Germany, France, Brazil and Mexico, as they conflict with existing employment law. Even in countries where the proposals are not illegal, such as in the UK, the BBA highlighted that firms could face problems implementing the proposals where they do not have the flexibility to vary existing contracts.
Under Bank of England proposals, submitted in March, bankers could be forced to return bonuses up to six years after receiving them and as much as a 11 years after a bonus was awarded.
'Whilst clawback may be legally possible, the actual ability to enforce clawback will be dependent on the decision of a court to enforce clawback clauses in employment contracts,' said the BBA submission, which was seen by the Financial Times.
The BBA also argued the requirement for retrospective clawback provisions would be difficult to impose. Instead it said the new rules should apply to variable remuneration after 1 January 2015.
News sponsored by:
As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.
Today's top headlines
With talk on interest rates on the horizon, our latest roundtable debate covers income investing against a changing backdrop
More about this:
On the road
on Jul 24, 2014 at 10:59