UK bankers’ bonuses could reportedly be deferred for up to 10 years and directors held personally liable for future collapses under a series of recommendations published by MPs and peers this week.
The British Parliamentary Commission on Banking Standards is also expected to call for a shake-up in the “approvals regime” register for senior bank executives and the opening up of the sector to more competition, according to newspapers.
It was reported last week that the commission will also call for the taxpayer-backed Royal Bank of Scotland to be split into a good bank and a bad bank.
The commission, chaired by Conservative MP Andrew Tyrie, includes the Archbishop of Canterbury Justin Welby and former Chancellor Nigel Lawson as well as Labour and Liberal Democrat parliamentarians.
Set up in the wake of a deluge of scandals including Libor rate-rigging and the mis-selling of payment protection insurance, it is said to be finalising the near 600-page report ahead of a release this week.
According to the Financial Times, the report will propose that UK bankers – who typically receive bonuses after one, two or three years – would be barred from accessing payouts for as long as ten years.
Those behind the idea believe it would motivate bankers to think more carefully about the long-term impact of their behaviour.
Some major banks already have long-term bonus deferral schemes but most are delayed for three or five years at most.
The proposal comes on top of EU measures to cap bonuses at one times salary - or double with the approval of shareholders.
Commission recommendations are also likely to include reforming the size and structure of overall pay levels, though it is not clear whether this applies only to UK banks or to any banker working in Britain, the FT reported.
According to the Sunday Telegraph, the report will also call for directors of large banks to be made more personally accountable for the failures of the institutions. One measure could even see them face financial liability should a bank collapse.
It will also reportedly include proposed changes to the “approved persons” regime amid concerns that it has failed by allowing those who were in charge at collapsed banks to remain on the register and continue working in financial services.
However, the commission is likely to steer away from the need for new criminal laws to target bankers and instead suggest more rigorous enforcement of the UK’s existing criminal law on fraud and market abuse, the Telegraph reported.
The newspaper also said there would be proposals on lowering barriers for new players to enter the retail banking sector, by making it cheaper and easier for them to access payment systems and reducing regulatory hurdles for them.
A spokesman for the commission declined to comment.