Mark Littlewood, Director General of the Institute of Economic Affairs said that if the Bank of England was serious about fostering an ethical culture in the UK banking sector, a clawback scheme on bonuses was entirely the wrong way to go about it.
He said: ‘The financial industry is already one of the most heavily regulated in the economy. If we persist with this upward trend of regulation, we risk undermining the City and pushing both talent and investment overseas. If implemented, this proposal will be fraught with legal difficulties, adding a further burden to the banking industry and its employees.
‘Bonuses incentivise high performance and regulation as severe as this will weaken that incentive. Trust in the banking sector is important but achieving it should not be to the detriment of the industry as a whole.’
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