We heard much ministerial rhetoric last year about reforming the City bonus culture, culminating in the Chancellor announcing a one-off super-tax in his pre-Budget report. But in the cold light of a new decade, what will change? Banks will have to disclose the remuneration of high-end executives - those on at least £1m a year (or possibly a lower threshold). But their identities need not be revealed. Meanwhile, the FSA gains new powers to regulate financial-sector remuneration to secure 'effective risk management'. It will be able to prohibit some incentive arrangements, declare bankers' contractual terms void and provide for clawback of proscribed payments. Restrictions on cash bonuses and encouragement of longer-term incentive schemes are likely, but the devil is in the detail and only contracts made after the revisions take effect will be caught. While corporate governance of banks and their tax arrangements are becoming more tightly regulated, the clampdown on pay and bonuses looks less draconian than Government soundbites suggested.
- Michael Burd and James Davies, Lewis Silkin LLP solicitors; e-mail: firstname.lastname@example.org