View more on these topics

Treasury launches legal challenge to EU bank bonus cap

The Treasury has today launched a legal challenge with the European Court of Justice to fight EU rules to cap bankers’ bonuses.

As part of a capital requirements directive, CRD4, the EU passed tough new rules to cap bank bonuses at 100 per cent of salary or 200 per cent with shareholder approval.

The rules passed with 26 to 1 approval among EU member states with the UK left isolated and unable to prevent the new law.

The Treasury fears the change will undermine responsibility in the banking sector and says it has been passed without a proper impact assessment.

It argues a cap will lead to an increase in fixed salaries which create instability in the sector. It will still be implementing the rules during its challenge.

It is the third ECJ legal challenge the UK has launched this year after actions on short-selling and the financial transaction tax where it has seen some success. It has also seen off EU attempts to move Libor supervision to Paris with the European Securities and Markets Authority.

The challenge focuses on comparing the cap with the EU Treaty and powers delegated to the European Banking Authority, which the Treasury believes go well beyond its remit of setting technical standards. The Treasury will be seeking clarity from the ECJ on these points.

A Treasury spokesperson says: “These latest EU rules on bonuses, rushed through without any assessment of their impact, will undermine all of this by pushing bankers’ fixed pay up rather than down, which will make banks themselves riskier rather than safer.

“In other words, as the Chancellor has said, they may undermine responsibility in the banking system rather than promote it.

“Regulation of pay in this manner goes beyond what is permitted in the EU Treaty. That is why we are challenging these rules in the European Court, to ensure the legislation respects the EU Treaty and actually achieves what it is meant to.”



Miliband would reduce small business rates with corp tax reversal

Ed Miliband will today announce plans to increase corporation tax and use the proceeds to reduce rates for small businesses if Labour wins the next election. Corporation tax is due to fall from 21 per cent to 20 per cent in April 2015, but today the Labour’s leader will pledge to reverse the cut should […]


‘Call me Lord Libor’: How Icap manipulated rates

The FCA has laid bare the full extent of attempts to rig Libor at inter-dealer brokerage Icap Europe after it was hit with £54.5m worth of global fines today. The brokerage, whose chief executive is Conservative party donor Michael Spencer, was fined for colluding with UBS to fix Japanese Libor rates over many years. The […]


‘Watch this space’: Labour signals further pensions tax relief reforms

Shadow pensions minister Gregg McClymont has signalled Labour will propose reforms of pensions tax relief before the next general election. Speaking at the Labour party conference in Brighton today, McClymont said the debate on the future of pensions tax relief will continue and to “watch this space” for Labour’s proposals. Earlier this year, the Pensions […]


Santander plans 70% increase in mortgage lending next year

Santander intends to lend up to £25bn next year, a 70 per cent increase on its 2012 lending, Money Marketing understands. Over the past two years the Spanish bank has been conducting a huge deleveraging exercise which saw its balance sheet shrink from roughly £173bn in 2011 to around £150bn now. This led to its […]

Health - thumbnail

Fit for Work: guidance for employers published

On Friday, the Department for Work and Pensions published its guidance for employers on using the new Fit for Work (FfW) service to help ill employees return to the workplace. It also includes more details on the tax exemption for medical interventions that commenced on 1 January 2015.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and thought leadership.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm