FINANCIAL SERVICES
City minister urges bank chiefs to exercise pay restraint
Financial secretary to the Treasury, Mark Hoban MP, urged the City to follow the public and private sectors and demonstrate pay restraint.
Speaking at the British Banker's Association annual industry dinner on 12 July at Mansion House, Hoban said:
“The fate of banks in terms of public trust and respect rests also in your hands. A key way of regaining public trust will be by reforming the system of remuneration. We have the opportunity to send a clear message to the public that the banking system now operates in a way that is fair and stable and no longer rewards employees based on short-term performance whilst leaving investors and taxpayers exposed to the long-term risks. It is better for the industry to lead these changes.
"But there is a role for the government too. We will explore the costs and benefits of a financial activities tax on profits and remuneration, and we will ask the FSA to examine further options in the forthcoming review of its remuneration code. And we will be encouraging all G20 members to implement the FSB principles on remuneration rigorously.
"The public sector and the private sector have been showing significant pay restraint since the recession. I don't need to tell you that the next bonus round will be conducted against a background of continued pressure in the private sector. And by visibly reforming the way they operate, banks can show that they exist to serve the whole economy, not just their own interests.”
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Details of the speech by City minister Mark Hoban at the British Banker's Association annual industry dinner on 12 July 2010 at Mansion House are available at www.hm-treasury.gov.uk/press_24_10.htm.