PM in crackdown on bankers' bonuses

Nov 15 2009

Gordon Brown has promised a "transformation" of the way the financial sector is policed as the centrepiece of Wednesday's Queen's Speech.

A Financial Services Bill will offer tough new powers to City regulators to tear up bankers' contracts if they include excessive pay and bonus deals which might threaten the stability of the financial system.

In an upbeat podcast on the Downing Street website, Mr Brown said Britain had a "bright future" ahead of it after the economic difficulties of the past year.

He said that the UK had fared well in terms of jobs and repossessions compared with the last recession under the Conservatives in the early 1990s.

And in sharp contrast to the vision of belt-tightening on offer from the Tories, the Prime Minister said he was "optimistic" about the coming period "which I believe can be one not of austerity but progress".

Chancellor Alistair Darling said the Financial Services Authority would be given new powers to stop bankers pocketing excessive bonuses or to cancel pay packages which rewarded undue risk-taking.

Legislation to be unveiled on Wednesday will also enable the FSA to require banks to renegotiate remuneration packages which breach its pay code, and fine those which continue to offer unjustifiable sums.

Mr Brown said: "We will ensure that the banking crisis we have experienced over the last two years should never again come at a cost to the taxpayer.

"This means a transformation of the way the financial sector is policed, with banks themselves and not the taxpayer made to pay for bank failings."