* FCA says bonuses being clawed back after misconduct fines
* Says banks trying to circumvent bonus caps
By Huw Jones
LONDON, Feb 4 Tougher guidelines on financial
sector pay are under consideration by the UK watchdog, though
extending a cap on banker bonuses to the wider industry looks a
step too far, a top regulator told UK lawmakers on Tuesday.
Under new European Union rules, banker bonuses can be no
higher than an individual's fixed salary, rising to double that
level if shareholder approval is obtained.
Financial Conduct Authority (FCA) Chief Executive Martin
Wheatley told lawmakers the watchdog's remuneration code for
banks and building societies would be reviewed.
"We are consulting on the remuneration code later this year
and a big consideration is whether and how far the code we have
needs to be extended," Wheatley told the Treasury Select
Pressed by lawmakers on whether the cap on bonuses should be
applied to insurers and asset managers, Wheatley replied: "It
sounds to me disproportionate."
Britain is challenging the bonus cap in the EU's top court,
saying it in practice makes it harder to curb excessive pay and
hampers a bank's ability to cut costs when markets turn sour.
Wheatley said the cap, which will hit bonuses awarded in
early 2015 and onwards, was already having "perverse" effects by
prompting banks to bump up basic salaries or take other measures
in anticipation of the measure coming into force.
"People are finding ways to pay cash amounts to move outside
the caps being constructed," Wheatley said. "The reaction has
been self-defeating and it has put up (the) fixed costs of
firms. It's not an ideal outcome."
The cap will also make it harder for regulators to claw back
bonuses, though it would not damage the City of London as a
leading financial centre as some have argued, he said.
Wheatley is trawling through banks' plans to award bonuses
for 2013, checking if they reflect poor conduct at several
lenders, such as fines for mis-selling financial products and
rigging benchmark lending rates.
Banks including Barclays, Lloyds and RBS
have been subject to substantial fines for various
transgressions in recent years.
"Real money has been clawed back," Wheatley said, without
being more specific about which banks or individuals had been
Lawmakers asked if senior managers at Lloyds would have
their bonuses clipped following the bank's record 28 million
pounds fine in December for the way it encouraged staff to sell
2 billion pounds of products that customers did not need.
Wheatley said the "whole concept of clawback" was that
people involved in bad decisions should suffer the consequences
of their actions.