The Financial Conduct Authority (FCA) and the Prudential Regulatory Authority (PRA) of the Bank of England have confirmed the abolition of the cap that limits bonuses to twice the basic salary for employees of, among others, banks. – Bank employees already benefit from huge bonuses. They don’t need another helping hand from conservatives, commented Paul Nowak, secretary general of the Federation of Trade Unions TUC, saying that the decision is indecent. “At a time when millions of people across the country are struggling to make ends meet, this offends them,” he said.
As reported by the BBC, the Financial Conduct Authority (FCA) and the Prudential Authority (PRA) of the Bank England confirmed the abolition of the limit that limits bonuses to twice the basic salary for employees of banks, building societies and investment companies.
– The bonus cap will be abolished from October 31, it was explained.
Trade unions: Bank employees already benefit from huge bonuses
The provision was introduced in 2014 when Great Britain belonged to the European Union. The limit was intended to limit excessive risk-taking in the financial industry. This was related to the experience after the financial crash in 2008.
However, bank management boards complained about these rules, claiming that they lead to higher basic salaries, which increases banks’ fixed costs. Others argued that unlocking bonuses for workers could make financial markets riskier.
Paul Nowak, secretary general of the Federation of Trade Unions TUC, called the decision “indecent”.
– Bank employees already benefit from huge bonuses. They don’t need another helping hand from conservatives, he said. “At a time when millions of people across the country are struggling to make ends meet, this offends them,” he said.
Nowak, quoted by “The Guardian”, noted that “Prime Minister Rishi Sunak has once again shown that he is more interested in growing the feathers of the richest than in helping families struggling with difficulties.” – Rampant inequality will do nothing to boost growth or competitiveness. They will simply slow down our economy, he explained.
Possibility to differentiate employee remuneration
A joint statement by the Polish Financial Conduct Authority and the Prudential Regulation Authority said the bonus cap had the “unintended consequence” of companies increasing their fixed remuneration. It was explained that if the largest part of remuneration is basic pay, employers have less opportunity to vary employees’ pay.
The plan to remove the cap on bonuses for bank staff was presented in the mini-budget in September 2022 under then-Prime Minister Liz Truss and her Chancellor Kwarteng. However, this package of measures caused confusion in financial markets and Kwarteng was fired shortly afterwards.
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