Monday 24th February 2014 | 15:48
Andrew Tyrie: A crude bonus cap does nothing to incentivise higher standards
Commenting on the EU bonus cap and the new pay schemes announced today by HSBC, the Chairman of the Treasury Committee, Andrew Tyrie MP, said:
"A crude bonus cap does nothing to incentivise higher standards. What we need is a fundamental reform of the bonus culture - including much longer deferral and much greater scope for clawback, as the Banking Commission proposed.
"Rewards need to be much better matched to the maturity of the risk. People should receive rewards only when it is clear that they have been earned.
"Higher salary and lower bonuses take bank remuneration in the opposite direction.
"In evidence to the Treasury Committee, Andrew Bailey recently warned that the bonus cap, and schemes put in place in response to it, would make his job of promoting the safety and soundness of banks more difficult. It looks like he is right."