I believe that it is right for banks to make a fair contribution to the public purse. That is why the Chancellor, George Osborne, introduced a permanent bank levy. This is expected to raise £2.9 billion in 2015-16.
I do understand your frustration with banks paying excessive bonuses, which is why I support the work to tackle unacceptable pay practices in the banking sector and ensure that pay is aligned with performance. Changes have been made to make banking more responsible and some of the toughest remuneration rules of any major financial centre have been introduced.
The banking regulator, the Financial Conduct Authority (FCA) now has some of the toughest rules in the world on bonuses, and its remuneration code applies to over 2,500 firms. This ensures, that less than a third of a bonus is now allowed to be in cash; the rest has to be in shares, or held back for up to three years. And banks are now better able to get money back if things go wrong later. The FCA also has a remuneration disclosure regime to ensure transparency over bank pay and bonuses.
Additionally, I welcome changes that have strengthened the framework for setting director's pay by introducing binding votes for shareholders. This is instrumental in holding the board to account, will further increase transparency and help curb the escalation of executive pay by giving shareholders a stronger voice over how executives are rewarded.
August 2015
