Top bankers risk having their bonuses deferred for up to a decade under plans to be published next week by a powerful commission of UK MPs and peers.
The proposal, in a draft report of the Parliamentary Commission on Banking Standards, envisages that UK bankers, who typically receive bonuses either immediately or after one, two or three years, would be barred from accessing the payouts for as long as 10 years.
Members of the commission, including Lord Lawson, the former Conservative chancellor, and Justin Welby, the archbishop of Canterbury, have been drafting their final conclusions since March, after spending six months hearing evidence from hundreds of witnesses.
The commissioners are due to meet on Monday and Tuesday, with a final report to be published as early as next Thursday, assuming Andrew Tyrie, the chairman, can rally consensus support for the draft report.
The commission was set up in the wake of the Libor rate-rigging scandal and other misdemeanours, such as the mis-selling of payment protection insurance and interest rate swaps, in an effort to spur a change of attitude among Britainâs bankers.
It has already published hard-hitting interim reports, including one on the failed bank HBOS, which prompted Sir James Crosby, its former chairman, to ask for his knighthood to be removed and for his pension to be cut.
The final report is expected to be equally uncompromising, with key sections on pay, professional standards and a new proposed sanctions regime for miscreants.
As the Financial Times reported early this week, the draft report also contains a strong suggestion that Royal Bank of Scotland should be split into a good and bad bank, although some members of the commission are likely to press for that proposal to be watered down into a recommendation for a thorough cost-benefit analysis of the idea.
But people close to the commission said the proposals on pay could prove the most radical. In addition to the long-term bonus deferral plan, there will be several recommendations, including ideas to reform the size and structure of overall pay levels.
It is unclear whether the recommendations in the report if enacted would apply only to UK banks or to any banker working in Britain.
By increasing bonus deferral periods, reformers believe bankers would be motivated to think more carefully about the long-term impact of their behaviour.
The proposal would also fit with the idea that it should be made easier for boards to claw back bonuses from bankers if business that initially looked successful backfires years later. Some banks, such as HSBC and Goldman Sachs, already have long-term bonus deferral schemes for senior bankers, but most delay bonus payouts for three or five years at most.
The commissionâs ideas come on top of incoming EU restrictions on bonus levels, which will limit the size of senior bankersâ bonuses to one times salary or two times with the express approval of shareholders.
