IT CANNOT be ignored that trust in banking is still lingering at alltime lows and, according to a recent
Yet I have reservations about the proposals outlined in yesterday's joint
Clawback is not a crude regulatory instrument like the EU bonus cap. But in suggesting tough rules by international comparison,
Yet this doesn't mean nothing should be done. We have expressed concern about the level of executive pay at the largest
Despite this, executive and director pay is primarily a matter for firms and shareholders. Yes, government has a role in facilitating the shareholdercompany engagement process. Wider civil society should also be involved in defining cultural norms in respect of appropriate levels of pay. But the determination of pay levels and structures in specific cases is a matter for shareholders and boards, who can relate their deliberations to the individual circumstances of each company.
Indeed, we have called for remuneration to be designed to promote the long-term success of the company and for performance-related elements to be stretching and rigorously applied. To quote Bischoff, "Remuneration and incentives that encourage people to cut corners or prioritise short-term gains over the long-term interest of the company should be rejected."
The level and structure of pay can also have an important effect on behaviour, and needs careful thought if it is to create the right incentives. This is no better demonstrated than in banking. And it does need to be acknowledged that the PRA/FCA is seeking to amend regulation for a specific sector - banks, building societies and designated investment firms.
So over the coming months, we will be looking to actively engage with the PRA and FCA on the core elements of this consultation. The regulators have started an important discussion and we look forward to contributing to it.
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