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U.K. Watchdog Has Power to Take Back Bonuses From Market Abusers

The U.K.’s banking watchdog said it has the authority to claw back bonuses from insider traders and market manipulators without needing beefed-up enforcement powers.

The Prudential Regulation Authority’s “powers are sufficient” to recover “vested remuneration in the cases of individuals who have been the subject of successful enforcement action,” the Bank of England said in response to a June report from the Parliamentary Committee on Banking Standards.

Bonus clawbacks are part of a program of sweeping change proposed by the cross-party panel of lawmakers set up by the U.K. government last year to reform the industry in the wake of the Libor manipulation scandal. The committee also said that parts of bonuses should be deferred for as long as 10 years and that “reckless” management of lenders should be made a crime.

“We welcome the report and, with few exceptions, intend to take forward its recommendations,” the Bank of England said in a statement on its website.

The Financial Conduct Authority, which polices financial markets from its headquarters in London, also responded to the committee’s report today saying it agreed with the “wider recommendations on remuneration,” according to a statement published on its website.

The PRA, which took over from the Financial Services Authority in April as the country’s top banking supervisor, will work with the FCA to “review the extent to which there is scope to extend bondholder influence” over banks’ disclosure of their own safety, the BOE said in the statement.

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