THE Bishop of Birmingham, the Rt Revd David Urquhart, has
supported calls for the creation of a remuneration code for
bankers, under which the profit-based elements of their
remuneration would be deferred for up to ten years.
Bishop Urquhart took part in the House of Lords' Committee Stage
debate of the Banking Reform Bill, in support of an amendment
designed to "strike a balance between risk to the bank providing
[the remuneration] and fair reward for the recipient of it.
"In the wake of the economic débâcles following 2008, one of the
greatest areas of concern among the public was the apparent lack of
change in the financial fortunes of those whom they viewed as being
most responsible for the banking crisis.
"The salaries of senior bankers seem to remain high, and bonus
levels have quickly regained their old levels, while, for many
ordinary people . . . across the country, it has been a matter of
tightening the belt and looking very seriously at difficult
household and commercial budget decisions."
He welcomed provisions designed to "limit sales-based
incentives": "In the PPI scandal, we saw what happens when banks
come to value the sale of financial products as the objective of
the whole exercise, with little or no thought for customers'
"Banks are now having to take responsibility for this culture of
selling at any cost, and the new remuneration code before us seeks
to make explicit the realisation that an excessively sales-based
culture can be very damaging both to the financial well-being of
customers, and to the reputation of the banks."
The amendment was opposed by the Government, which said that the
financial regulators had already used their existing powers to
create a mandatory remuneration code.
Lord Newby told peers that this existing code "requires that at
least 60 per cent of variable remuneration above £500,000, or to a
director of a significantly sized firm, is deferred over a period
of not less than three to five years".
The existing code, he said, had statutory backing, and "any
breaches . . . can be punished with serious sanctions." He warned
that "overprescribing in primary legislation risks adding an
unwieldy layer to what is already an effective process."
The amendment was withdrawn without a vote. The Upper House
completed its Committee Stage of the Banking Reform Bill last week.
There will be a further debate at Report Stage and Third Reading
before it returns to the House of Commons.