13th February 2015
Labour has said it will extend the period over which bankers’ bonuses can be clawed back if it comes to power after the election.
Currently bankers who are found guilty of misconduct can have the last seven years of bonuses and fixed pay clawed back but Labour wants to extend this to 10 years.
This means those bankers who committed misconduct a decade ago could have to pay back thousands of pounds, according to the BBC.
The claw-back period has only recently extended to seven year, and last year had been three-to-five years. The Bank of England extended the period because some misconduct, such as interest rate rigging, would take years to unravel.
Labour shadow chancellor Ed Balls said the seven-year period was ‘too weak’ especially in light of recent revelations that Swiss banks, including HSBC private bank, had promoted tax evasion schemes to wealthy clients from 2005 to 2007.
‘When people have done the wrong thing in banking, we agree with the governor of the Bank of England, that the bonuses should be repaid, in fact we’re saying that claw-back should go back 10 years,’ said Balls.
‘We will ensure people involved in misbehaviour and misconduct would have to give back their bonuses for at least a decade after they have been paid out.’
Balls said that there was still ‘major reforms and long-term cultural change’ that needed to happen in UK banking and that Labour would also introduce a one-off take on bankers’ bonuses to help young people who have been unemployed for 12 months or more.
The party is also planning a new bank levy to pay for increased childcare for working parents.
The Conservative party has already dismissed the claw-back extension by saying the Bank of England is already consulting on a 10-year period.
‘A banking reform plan written by Ed Balls is like a fireworks safety guide written by Guy Fawkes, nobody will trust a word he said,’ a spokesman for the Conservatives told the BBC.