Bonuses are back
Monday, 03 August 2009 14:51
Bonuses are back in the news, with headlines in the press claiming that City banks are returning to the large salaries and bonuses of old and which are widely blamed for having caused or contributed to the recession we are all currently enduring. The FSA also recently published a letter sent by their Chief Executive Hector Sants to the CEOs of the financial institutions and banks which will be subject to the FSA’s proposed Remuneration Code: it is envisioned that this new policy will be adopted by the FSA Board shortly, and take effect on 1st January 2010.
The letter requires the businesses concerned to send their remuneration policies to the FSA for review by the end of October 2009 so they can be checked against the pay policies of the FSA’s proposed policy and the Turner Review consultation paper. It states
“In particular, I would draw your attention to the fact that guaranteed bonuses which run for a period of more than one year may be inconsistent with effective risk management. Moreover, we are not proposing to extend grandfathering arrangements to obligations entered into after publication of our consultation paper on 18 March 2009. It is essential that the market should not revert to remuneration practices that would be incompatible with our intended outcomes if the rule and code become effective next year.”
In other words bad news for guaranteed bonuses, especially those entered into since last March. Time will tell what the response of the institutions will be. If you need advice on your bonus position, or if you are refused payment of a bonus to which you feel you are entitled, please contact us for advice.
You can read the full letter on the link below: http://www.fsa.gov.uk/pubs/ceo/ceo_letter0709.pdf