Liberal Democrats' five point plan to tackle bankers' bonuses (South Dorset Liberal Democrats)

South Dorset Liberal Democrats <info@southdorsetlibdems.org.uk>

Liberal Democrats' five point plan to tackle bankers' bonuses

April 13, 2010 1:31 PM
By Nick Clegg in press conference

 The Liberal Democrats today set out radical new proposals to clamp down on bankers' bonuses.   The five point plan will ensure the bonus system can never again encourage banks to behave in the way that led to the banking crisis.  Under the Liberal Democrats, excessive cash bonuses will come to an end, there will be no bonuses for board members and there will be no rewards for failure.  Liberal Democrat Leader Nick Clegg said:  "I want to see fundamental reform to Britain's banks. Only by transforming the banking industry from top to toe can we start to build a new economy.  "I make no apologies for the fact this will mean big changes in the City of London. I want to see a change as fundamental as the Big Bang of the 1980s, for the better, not the worse.  "I want to focus, today, on one particular issue: bankers' bonuses. They have become symbolic of the culture of greed and excess that dominated the City in the build-up to this crisis. We have a five point plan to finally bring the bonus culture in banking under control.  "Liberal Democrats will ensure the bonus system can never again encourage banks to behave recklessly. Ultimately our plans to break up the banks and make the banking industry more competitive will bring an end to the excess profits of the investment banking system and the massive bonus payouts that come with it.  "But we should not wait. Bankers must understand that after the billions pumped into the banking sector there can be no financial or moral justifications for the obscene bonuses which are still being paid out."  The Liberal Democrats will ensure that the bonus system can never again encourage banks to behave in the way that led to the banking crisis. Ultimately our plans to break up the banks and make a more competitive banking industry will bring an end to the excess profits of the investment banking system and with it the massive bonus payouts. However, the Liberal Democrats also have a five point plan to tackle bankers' bonuses quickly. This is:  1. No cash bonuses - We will require all bonuses in excess of £2,500 to be paid in shares. These shares will only be redeemable after five years; it will be written into the right of entitlement of these shares that they will revert to the company if they are pledged or used as security prior to the date of their redemption.  2. No bonuses at board level - We will ensure there are no bonuses at the board level of banks. This is not to say that board directors should not be well paid, but that they should have the long term interests of a company at heart - bonus payments do not encourage this.  3. No rewards for failure - We will extend the Financial Services Act to ensure that no regulated institution which has made a loss can pay discretionary bonuses.  4. Total transparency - We will require the publication of the names of all bank staff that have salaries and bonuses that are greater than the Prime Minster's salary (which is just under £200,000). In addition we will require the FSA to publish its assessment of all regulated firms remuneration policy.  5. Holding directors to account - We will extend the powers of the FSA to ensure that the directors of banks are personally fined if their institution breaks the current code of practice for remuneration.