The Institute of Directors has raised doubts about Labour’s plan for clawing back bankers’ bonuses up to a decade after they are paid.
The shadow chancellor, Ed Balls, said on Thursday he would like to extend the so-called “clawback” of bonuses so that banks can demand repayment up to 10 years later – instead of the current seven – if employees turn out to have behaved recklessly.
While urging City institutions to engage with the plans, the IoD’s director Simon Walker said: “Ten years is a long time for a bonus to be vulnerable and clawbacks of this length should be reserved to matters where there is a significant ongoing risk.”
The IoD is also nervous about Labour’s proposal to force financial firms to publish the number of their employees who are paid more than £1m a year.
“We think it would be useful to publish numbers of staff in a range of pay bands, rather than one crude figure of those earning more than a million. This should be part of wider measures to give shareholders clearer information about how much is going on employees, directors and dividends,” the IoD said.
Labour published its tough proposals amid the furore about the behaviour of HSBC’s Swiss arm in facilitating tax avoidance for its wealthy clients.
Balls said: “As we have seen in recent days, wrongdoing can take years to uncover. The current proposals to claw back bonuses are too weak and do not cover a long enough period of time.”
