Final bonus clawback rules have been published by the PRA, which will come into effect from 1 January 2015.
The rules will introduce a minimum seven-year period for clawback, starting from the date of award. This will include deferred bonus payments paid incrementally, with the minimum clawback period commencing from payment of the first deferred award.
Commenting on the finalised rules, Policy & Research Director at ICSA Peter Swabey said: ‘It is clearly inappropriate for bonuses to be paid and retained by those guilty of misbehaviour or material error, and we therefore support the steps that the Bank of England is taking to address this issue.
‘However, we are concerned that addressing clawback in isolation may miss the opportunity to address deferred payments as part of a holistic review of remuneration practice. This may act to drive up remuneration, or at least the fixed pay element, as a result of the increased uncertainty that will hang over payments for many years.’
The PRA opened a consultation to finalise the rules earlier this year which ended in May 2014, which the ICSA responded to
, commenting on the proposals outlined at that time.
CBI Director-General, John Cridland said: ‘Pay deferral and clawback will make sure that performance and remuneration are aligned for the long term and can help keep conduct in check.
‘But as these new rules are amongst toughest in world, we need to be careful we don't create uncertainty which might make it increasingly hard to attract talent to London. The Government needs to work hard to ensure the UK remains competitive as a leading global financial centre.’