Bank of England deputy governor Paul Tucker is calling for an overhaul of bankers’ bonuses by putting bankers personally on the hook for their firms’ survival.
Speaking at the British Bankers’ Association conference in London last week, Tucker said the reform would encourage safer banking and rules should be revisited across the European Union and G20.
Tucker is currently the bookmakers’ favourite to replace Bank governor Sir Mervyn King when he leaves in June next year.
He said: “Having managers exposed to instruments whose value depends on the survival of their firm would give them a healthy incentive to maintain a safe and sound bank.
“There should also be a review of the structure of remuneration for desk-level bankers – tying pay to the medium-term success of the firm. Putting it bluntly, that would make it less easy to get rich quick irrespective of the quality of business transacted or the compliance culture in their part of the firm.”
Tucker also said the FCA will represent a “big change” for the industry and will be a tougher and more challenging regulator.
Tucker said: “The FCA’s approach to enforcement will need to preserve and, where necessary, restore honesty in a market community for which side-stepping rules and principles has become too close to being part and parcel of commercial life.”