UK: bank remuneration and the role of Government

The Financial Secretary to HM Treasury, Mark Hoban MP, delivered a speech last night at the British Banker's Association annual industry dinner. With regard to remuneration, the Financial Secretary stated:

The fate of banks in terms of public trust and respect rests also in your hands. A key way of regaining public trust will be by reforming the system of remuneration. We have the opportunity to send a clear message to the public that the banking system now operates in a way that is fair and stable and no longer rewards employees based on short-term performance whilst leaving investors and taxpayers exposed to the long-term risks. It is better for the industry to lead these changes.

But there is a role for the Government too. We will explore the costs and benefits of a Financial Activities Tax on profits and remuneration, and we will ask the FSA to examine further options in the forthcoming review of its remuneration code. And we will be encouraging all G20 members to implement the FSB principles on remuneration rigorously".