UK regulators set to legally cap financial services salary packages
The Financial Services Authority has today confirmed that a voluntary code of practice which was released earlier this year could become law and legally binding during 2009. The guidelines relate to employment packages across an array of large banks and broker-dealers in the UK and suggest that fixed salary elements are raised at the expense of bonus payments which have historically been very large.
There is also a call for a large part of any potential bonus to be deferred to incentivise employees and ensure that excessive risks were not taken to attract the bonus. However, while a number of influential parties have come forward to suggest that the guidelines make very good sense and should be enshrined in law there is a feeling that many UK financial institutions will either find a way around the guidelines or simply move overseas.
The idea of a free employment market appears to be something of the past in the UK with the UK government and UK regulators taking a stronger and stronger hold of salaries and bonuses. There is a suggestion that some employees in the financial sector will argue these limits and caps infringe their human rights, and their right to be remunerated alongside their skills, but whether they will actually end up in court remains to be seen.
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