Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

Bonus clawbacks unenforceable, says BBA

Bonus clawbacks unenforceable, says BBA

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.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play WMR: Why Russia will lose this war

WMR: Why Russia will lose this war

Author and journalist Adam Lebor believes a perfect storm is brewing when it comes to the Russian economy. .

Play WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

Chief economic adviser to London mayor Boris Johnson outlines the geo-political risks in Asia and explains why the risk of another eurozone crisis must not be underestimated.

Play Japan's slump, the umbrella revolution and the battle for Brazil

Japan's slump, the umbrella revolution and the battle for Brazil

With the arrows of Abenomics appearing to be missing their targets and political uncertainty rife in Hong Kong and Brazil we take a look at investor sentiment in this week's Investment Pulse

Your Business: Cover Star Club

Profile: The adviser that tempted Robin Minter-Kemp on board

Profile: The adviser that tempted Robin Minter-Kemp on board

It is rare to meet an impassioned individual who is willing to bang the drum for investment advisory right now

Wealth Manager on Twitter